UPDATE 2-Mexico central bank holds key rate, points to weak economy
(Adds market reaction, central bank comments on peso)
By Michael O'Boyle and Alexandra Alper
MEXICO CITY, June 4 (Reuters) - Mexico's central bank held borrowing costs steady on Thursday, pointing to sluggish economic growth while noting that inflation pressures remained muted following a deep slump in the peso.
The Banco de Mexico left its key interest rate at 3.00 percent, as expected by all 15 analysts surveyed by Reuters last week.
Policymakers said slack in the economy would help contain price pressures. That backs analysts' expectations the bank was unlikely to raise interest rates before the U.S. Federal Reserve does so, unless the peso weakens much further.
Yields on Mexican interest rate swaps were little changed after the statement as investors stuck to bets that the central bank would hike rates by about 50 basis points in the fourth quarter.
Brazil, the region's largest economy, has raised borrowing costs to their highest in six years to control a spike in inflation even as it appears to be sliding into recession.
Weak growth in the United States hurt Mexican exports early this year, but the central bank said external demand has appeared to pick up amid signs of stronger consumer spending.
Data last month showed Mexico's annual inflation rate cooled in early May to a more than nine-year low of 2.93 percent. The central bank said in its statement there was no sign the weak peso was causing wider price pressures. Continuación...