UPDATE 2-Mexico central bank holds interest rates, sees better growth

viernes 25 de abril de 2014 12:21 GYT

(Adds market reaction, central bank and economist comments)

MEXICO CITY, April 25 (Reuters) - Mexico's central bank kept interest rates on hold on Friday, noting tame price pressures and highlighting signs of improving economic growth that bode for steady borrowing costs ahead.

The Banco de Mexico maintained its benchmark interest rate at a record low of 3.50 percent, as expected by analysts polled by Reuters.

The central bank said growth in the United States, Mexico's top trading partner, was getting stronger. Policymakers pointed to rising Mexican exports and higher public spending that suggested the economy was improving after a weak start of the year.

"Downside risks to economic activity growth remain, though the balance of these improved marginally," the bank said in a statement.

Mexican annual inflation eased for the third month in a row in early April and policymakers are seen holding rates steady into next year, in contrast with top regional economy Brazil which has raised interest rates to fight inflation.

Yields on shorter-term Mexican interest rate swaps ticked up as traders were surprised by the more optimistic tone of the central bank, analysts said. Investors firmed bets on a 25 basis point interest rate hike in March 2015.

Policymakers said their outlook on inflation was unchanged versus a March decision.   Continuación...