UPDATE 2-Mexico central bank says inflation has likely peaked
By Michael O'Boyle and Tomas Sarmiento
MEXICO CITY Feb 12 (Reuters) - Mexico's central bank on Wednesday said that a recent spike in inflation had likely peaked, suggesting policymakers will leave interest rates steady this year.
Banco de Mexico Governor Agustin Carstens said at the presentation of the bank's quarterly report that policymakers would act if they saw that a recent jump in consumer prices was spurring wider price pressures, such as higher wages.
Consumer price inflation in Latin America's No. 2 economy rose to an eight-month high of 4.48 percent in January due mostly to a new tax on soft drinks, surging past the central bank's limit of 4 percent.
"The shocks we are seeing are transitory," Carstens said. "We would raise interest rates if we saw evidence of second-round effects."
Carstens said inflation had likely peaked during the first half of January, when the new taxes took effect, and price behavior in the second part of the month suggested the tax hike was not spurring wider price pressures.
The central bank said in its report that annual inflation would remain above 4 percent in the first months of 2014 before falling below that level in the second half of the year. Last November, the central bank forecast inflation of around 3.5 percent this year.
Mexico's central bank kept its main interest rate on hold at a record low 3.50 percent on Jan. 31, saying it would watch inflation expectations while also making sure a slump in the peso does not stoke further price pressures. Continuación...