Mexico's Sanchez says central bank must be vigilant on inflation

MEXICO CITY Wed Feb 20, 2013 7:23pm EST

MEXICO CITY Feb 20 (Reuters) - Mexico's central bank must remain vigilant on inflation and a recent decline in consumer prices does not guarantee convergence to the central bank's target, board member Manuel Sanchez said on Wednesday.

"The short period of recent improvement in inflation, the extraordinary factors that explain it, and the absence of convergence toward the inflation target, require a vigilant monetary policy," Sanchez said, according to the copy of a speech delivered in Mexico City that was posted on the central bank's website.

"Convergence of inflation to the permanent target demands more than a few months of good results," said Sanchez, who is seen as the Banco de Mexico's toughest inflation fighter.

Mexico's annual inflation rate is seen picking up in early February for the first time in five months to 3.40 percent, from a 3.25 percent rate in January. Mexico's central bank targets an inflation rate of 3 percent, plus or minus one percentage point.

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