MEXICO CITY: Mexico's central bank held interest rates steady on Thursday at a record low as policymakers eyed greater risks to growth and flagged concerns that a weak peso could fan consumer prices.
The central bank held its main interest rate at a record low of 3.00 percent, as expected by 26 of 27 analysts polled by Reuters, after inflation slowed to the central bank's 3 percent target last month for the first time in nearly nine years.
But policymakers said inflation, which should close the year below 3 percent, could be pushed up by a deeper slump in the peso.
"We cannot rule out a new increase in international volatility that could affect the peso, especially faced with uncertainty about the normalization of US monetary policy," the bank said. Mexico's peso this month weakened to historic lows against the dollar, hammered by a slump in oil prices and fears that an imminent hike in interest rates by the US Federal Reserve may spur capital flight from emerging markets.
A majority of Wall Street's top banks now see the Federal Reserve holding off until at least September before raising interest rates for the first time since 2006.
Mexican central bankers on Thursday also flagged less dynamism in Mexico's export sector, which combined with low oil production and weak consumption could weigh on growth this year.
Latin America's No. 2 economy, which has been hurt by weak local demand, grew 2.1 percent for all of 2014, up from 1.4 percent in 2013. Analysts polled by the central bank see growth of just over 3 percent this year.
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