UPDATE 2-Mexico central bank holds rates, eyes pickup in growth

viernes 11 de julio de 2014 11:40 GYT

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MEXICO CITY, July 11 (Reuters) - Mexico's central bank kept interest rates on hold on Friday, highlighting signs of stronger economic growth while still pointing to slack in the economy that bodes for steady borrowing costs ahead.

The Banco de Mexico maintained its benchmark interest rate at a record low of 3 percent, as expected by analysts polled by Reuters, after policymakers surprised markets by delivering a 50 basis point cut last month.

Board members said growth picked up in the second quarter after a soft patch but warned domestic spending "still hasn't shown clear signals of recovery." They pointed to economic headwinds that will keep consumer price pressures contained until late 2015.

Still, policymakers said they would monitor the factors affecting inflation "including the expected economic recovery and the relative monetary posture of Mexico compared to the United States," suggesting they would not cut interest rates further.

The U.S. Federal Reserve is expected to raise its benchmark interest rate in the middle of next year. The median forecast of analysts surveyed by Reuters last week is for Mexico to move in sync, raising its benchmark rate 25 basis points in the second quarter of 2015, on par with a prior poll.

Credit Suisse economist Alonso Cervera expects the central bank to begin raising rates in the second half of next year.

"When the Fed hikes and if we get turmoil in the markets, I think the central bank will be quick to react," he said.   Continuación...