UPDATE 1-Mexico inflation rate cools in March
(Adds historical comparisons, context) MEXICO CITY, April 7 (Reuters) - Mexico's annual inflation rate eased in March and remained below the central bank's 3 percent target, giving policymakers room to keep interest rates on hold amid a partial recovery in the peso. Inflation in the 12 months through March cooled to 2.60 percent, the national statistics agency said on Thursday. That compared with a forecast of 2.63 percent in a Reuters poll and 2.87 percent in February. Before beginning to rise in January, Mexico's annual inflation rate posted a series of record lows last year, marking the longest period ever in which price gains stayed below the central bank's 3 percent target. The central bank has said it expects inflation to creep up above its target in 2016 but end the year around 3 percent. Policymakers in Latin America's No. 2 economy raised interest rates in December following a move by the U.S. Federal Reserve and surprised the market with another hike in February in a bid to support the battered peso. After the central bank on Feb. 17 raised interest rates and intervened in the foreign exchange market, the peso has recovered some ground from an all-time low, but the currency is still down about 3 percent this year against the dollar. Consumer prices rose 0.15 percent in March compared with the prior month, below estimates of a 0.18 percent increase. The core index, which strips out some volatile food and energy prices, rose 0.36 percent from February compared with 0.41 percent seen in the poll. The 12-month core inflation rate rose to 2.76 percent compared to a forecast of 2.8 percent and a 2.66 percent rate in February. (Reporting by Alexandra Alper; Editing by Andrea Ricci)
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