MEXICO CITY: Mexico's central bank kept interest rates on hold on Friday and argued that a recent spike in inflation would quickly fade next year while flagging the risk that social unrest in the country could dampen a modest recovery.
The Banco de Mexico maintained its benchmark interest rate at a record low of 3.00 percent, as expected by 15 of 16 analysts polled by Reuters.
Policymakers said the risks to growth were unchanged from September when they noted that economic activity had improved.
Among the risks that could lower consumer price pressures, the central bank noted, "the possibility of less dynamic economic activity than forecast in case recent social events in the country affect the expectations of economic agents." Major street protests have been held over the past month since 43 students were abducted by police in southwest Mexico on Sept. 26.
The search for the missing students has become the sternest test yet for President Enrique Pena Nieto.
The annual inflation rate in Mexico accelerated to a nine-month high of 4.32 percent in early October, above the bank's 4 percent ceiling, but policymakers said on Friday they expect inflation to ease back toward their 3 percent target by mid-next year.
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