UPDATE 2-Mexico cenbankers agree on rate rise signal but little else
* Minutes show interest rate warning agreed unanimously * All policymakers see higher price risks in short term * Board divided 3-2 on longer-term inflation outlook, risks By Krista Hughes and Alexandra Alper MEXICO CITY, Nov 9 (Reuters) - Mexico's central bankers unanimously agreed to send a signal that they may raise interest rates soon if inflation remains high, but meeting minutes released on Friday show deep divisions on the prices outlook, suggesting little chance of imminent action. All five members of the Banco de Mexico's monetary policy board voted to keep interest rates steady at 4.5 percent at the meeting two weeks ago, according to minutes of their discussion. Policymakers were also united in their decision to put markets on notice that they were ready to hike preemptively if inflation - which slowed for the first time in five months in October - did not trend down toward their 3 percent target. "All members of the board agreed to send a signal of a possible rate adjustment in the future if high levels of inflation persist in order to reinforce the anchoring of inflation and of inflation expectations, as well as to prevent contagion," the minutes said. Members all agreed that the short-term risks to inflation had risen, but the summary of their debate about such risks shows little unity beyond that. Economists said many on the board clearly did not think they would need to carry out the threat. "They had to send a signal showing their commitment to hike if they have to, but then when it comes to the conditions that are required to hike, there is a lot of disagreement," said BNP Paribas economist Nader Nazmi, who expects rates to rise in October 2013. Most board members said the recent spike in inflation was temporary and would reverse itself, though others argued that there was no clear sign of inflation heading toward 3 percent. Most saw no sign of widening price pressures, but one member argued that processed food and food services prices were being pushed higher by a spike in fresh food prices. Most saw inflation expectations as well anchored, yet others disagreed with one arguing the public's faith in the central bank could be shaken by current high inflation rates. NO HIKE IMMINENT Investors are pricing in a hike in early 2014, having backpedaled on bets on a 2013 move after inflation came in at a lower-than-expected 4.6 percent in October, easing off a 2-1/2 year high the previous month. The data backed the central bank's forecast of an easing in the price pressures that have plagued Latin America's No. 2 economy over the past five months. Inflation has been pushed to quicken by fresh food prices as the cost of eggs and chicken rose following an outbreak of avian flu in western Mexico and bad weather damaged crops. However, data released by the National Statistics Agency showed a drop in some fresh food prices last month and few signs of knock-on effects, assuaging fears that sustained high food prices would hit prices of other less volatile goods. The central bank has also said a stronger peso as well as an expected deceleration in growth in the second half of the year would help tame inflation as a global slowdown dragged on Mexico. Economists said wage increases - one concern cited by at least some policymakers - had already started to turn down, pointing to data from the employment ministry showing wages rose 4.2 percent in the year to October, from 5 percent in August and September.
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