MEXICO CITY: Mexican annual inflation likely cooled in early March to just below the central bank's upper limit, which would back expectations that policymakers will leave interest rates on hold this year.

Inflation for the 12 months through the first half of March was seen easing to 3.97 percent, according to the median of 10 analysts polled by Reuters, down from a 4.21 percent rate in the first half of February and a 4.23 percent rate for the full month.

Mexico's central bank targets inflation of 3 percent with a 1 percentage point tolerance band. A jump in consumer prices, due mostly to new taxes on soft drinks and junk food, pushed inflation above the 4 percent limit in January and February.

Mexico's central bank kept it benchmark interest rate on hold at 3.50 percent on Friday, pointing to slack in the economy while noting the spike in inflation had eased and was unlikely to spur wider price pressures.

The Reuters poll forecast that consumer prices rose 0.22 percent in the first half of the month. Core consumer prices, which exclude some volatile food and energy prices, were seen rising 0.16 percent.

The data is due Monday at 8 a.m. (1400 GMT).