WRAPUP 1-Mexico central bankers split over rate cut signal-minutes

Fri Feb 1, 2013 10:41am EST

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* Analysts trim 2013 inflation outlook

MEXICO CITY Feb 1 (Reuters) - Mexico's central bankers disagreed over whether to send a signal that interest rate cuts are possible to support growth as long as inflation remains tame, according to minutes of their discussion, released on Friday.

Banco de Mexico board members unanimously decided to keep interest rates steady at 4.5 percent at their monetary policy meeting two weeks ago, but one argued it was premature to hint at lower rates.

"The majority of board members considered that the economy could grow at a faster pace without observing inflation pressures, in which case it would be possible to have a lower level of rates without compromising convergence to the inflation goal," the minutes said.

"In contrast, one member indicated that inflation has not yet converged to 3 percent. He added that sending a signal of a future rate reduction could be premature, given that there is not yet enough information to justify such a move."

Inflation is falling towards the Banco de Mexico's 3 percent target, to 3.57 percent in December and 3.21 percent in early January, after seven months above 4 percent in mid-2012.

The minutes showed most policymakers thought risks to inflation had eased and would keep on a downward path towards 3 percent in 2013.

Board member Manuel Sanchez said on Tuesday the easing in inflation was a good sign for the future although the downward trend was yet to be consolidated.

Mexico's finance ministry forecasts growth of 3.5 percent in Latin America's second-largest economy this year from an expected 4 percent in 2012, after strong U.S. demand for Mexican-made cars and manufactured goods.

In a separate poll carried out by the central bank, analysts lowered their expectations for inflation in 2013 to 3.67 percent, down from 3.69 percent in the previous survey , according to the average of 32 analysts.

The economy is seen growing 3.55 percent over the same period compared to a 3.45 percent forecast in the last poll in December.

The central bank poll changed its methodology this month, deepening the information on growth and inflation forecasts by including probability distributions as well as median estimates.

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