UPDATE 2-Mexico cenbank likely on hold before Fed rate hike -minutes

jueves 14 de mayo de 2015 11:56 GYT

(Adds foreign exchange intervention reference)

MEXICO CITY May 14 (Reuters) - Most of Mexico's central bankers are eyeing sluggish economic growth, suggesting they will hold interest rates steady in the coming months, but said they could quickly raise rates if a steep slide in the peso hits inflation expectations.

Central Bank board members voted 5-0 at their April 30 meeting to hold their benchmark rate at a record low of 3.0 percent, minutes showed on Thursday.

All members agreed it was inappropriate to raise interest rates now, with the majority seeing more costs than benefits from hiking before the U.S. Federal Reserve raises borrowing costs.

Still, all members agreed they would quickly act with "all available tools" if inflation expectations become unanchored - for example, if the peso continues to slide.

Mexico's peso in March sank to a historic low against the dollar, hammered by a slump in oil prices and fears that an imminent U.S. rate hike may push investors to dump emerging market assets.

A majority of board members said that they could not rule out further international market volatility hammering the peso, but added they have the intervention tools to ensure a well functioning exchange market.

However, most central bankers agreed that strong macroeconomic fundamentals are key for those tools to work, highlighting the importance of fiscal consolidation.

Mexico's government cut its 2015 budget by nearly 3 percent in January, after a drop in global oil prices hurt public finances.   Continuación...