UPDATE 2-Mexico central bank split over possible hike before the Fed
(Adds central bank, analyst comments)
MEXICO CITY Aug 13 (Reuters) - Mexico's central bank was divided over its decision in July to hold rates steady, with one member arguing that a pre-emptive hike before the U.S. Federal Reserve acts would help ease uncertainty that has hit financial markets.
The bank board voted 3 to 1 at its July 30 meeting to hold the benchmark rate at a record-low 3 percent, minutes released on Thursday showed. Board member Manuel Ramos Francia was not present for the decision.
In agreeing to keep the rate unchanged, the majority said the economy was still weak, while inflation expectations had not been hurt by deep losses in the peso.
The one dissenting member, who voted in favor of a quarter-point hike, said that a "preventive" move was convenient, given imminent rate action expected from the Fed. The minutes do not say how each member present at the board meeting voted.
Some members said a hike before the Fed could be justified if Mexican financial stability was threatened by a mass sell-off of peso bonds by foreign investors.
"They are probably sending us a signal that they are ready to act if things get ugly," said Marco Oviedo, an analyst at Barcalys Capital in Mexico.
Banco de Mexico Governor Agustin Carstens on Wednesday said policymakers could act before the Fed if peso losses threaten inflation expectations. Major businesses have warned they may have to raise prices if the currency continues to slump.
Mexico could increase intervention if the peso hits 17 per dollar, about 4 percent weaker from current levels, and a disorderly move past that level could prompt the central bank to tighten policy, according to a Reuters poll on Wednesday. Continuación...