(Adds details on expected timing of interest rate moves, detail on peso)
By Alexandra Alper
MEXICO CITY, July 23 (Reuters) - Mexico's annual inflation rate cooled in early July to a record low, official data showed on Thursday, giving policymakers room to hold interest rates low until an expected increase in U.S. borrowing costs.
The national statistics institute said inflation in the 12 months through mid-July eased to 2.76 percent from 2.87 percent in June. A poll of analysts by Reuters had forecast the rate would be unchanged.
Most of Mexico's central bankers think inflation will remain below their 3 percent target for the rest of the year because of the sluggish economy.
Despite tame inflation and weak growth, Mexico is seen raising interest rates when U.S. borrowing costs move higher.
A Reuters poll published on Thursday predicted the U.S. Federal Reserve would raise interest rates in September. Another poll earlier this week by bank Banamex showed analysts expect Mexico to hike rates by 25 basis points the same month.
The Mexican data showed that consumer prices rose by 0.09 in the first half of July. The analysts' poll had forecast a 0.17 percent increase.
The core price index, which strips out some volatile food and energy prices, climbed 0.10 percent in early July, compared with expectations of 0.15 percent.
The 12-month core inflation rate came in at 2.30 percent. A rate of 2.36 percent had been forecast.
Mexico's peso has slumped since last year, hitting a series of record lows against the dollar, most recently at 16.1475 pesos per dollar on Wednesday.
Central bank governor Agustin Carstens said earlier this month that Mexico's exchange rate could generate inflationary pressures at some point.
Analysts polled by the central bank forecast growth of 2.6 percent this year, after the economy grew at its slowest pace in more than a year in the first quarter, undermined by flagging oil revenue and weak U.S. growth. (Additional reporting by Jean Luis Arce; Editing by Meredith Mazzilli)