MEXICO CITY: Mexico's central bank kept its benchmark interest rate low on Friday to help the economy while warning that growth could begin to pressure inflation around mid-year.
The central bank held its target rate for overnight lending between banks at 4.5 percent, the lowest since policymakers began targeting the rate in January 2008.
The decision at the bank's monthly policy review was unanimously expected by 21 economists polled by Reuters.
The benchmark rate has been held at 4.5 percent since July 2009.
Policymakers said in a statement accompanying that strong exports and growth in private spending meant the economy was accelerating enough to begin fuelling inflation around mid-year.
"It is foreseeable that the output gap continues to close and turn positive around the middle of this year," the central bank said.
Mexico has lagged its regional peers in terms of growth after posting one of the world's deepest economic contractions of 2009.
While Brazil and Chile have hiked interest rates repeatedly over the last year, Mexico is not expected to follow suit until early next year.
Annual inflation in Mexico touched its lowest rate in nearly five years last month as Latin America's second-largest economy expands without putting much pressure on prices.
The 3 percent annual inflation rate of March matched policymakers' long-term target and central bank chief Agustin Carstens recently said he was relishing Mexico's ability to balance growth and prices.
The annual inflation rate has run below analysts' expectations every month this year and has not been this low since May 2006.
The Mexican economy grew by 5.5 percent last year, the biggest expansion in a decade, and the central bank has said the economy could grow as much as 4.8 percent this year.
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