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UPDATE 1-Mexico cenbank to raise rates if necessary - Guemez

Fri Mar 9, 2007 10:38am EST

(Adds details, background)

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MEXICO CITY, March 9 (Reuters) - Mexico's central bank will raise interest rates if necessary to bring inflation back toward its target of 3 percent, the deputy governor of Mexico's central bank, Guillermo Guemez, said in a newspaper interview published on Friday.

"Our goal would be to tighten monetary policy if necessary, to bring (inflation) down and bring the trend back toward the target of 3 percent," Guemez said in an interview on Friday with El Economista newspaper.

Guemez is one of five voting members of the central bank's monetary policy board.

Mexican inflation has spiked in recent months due to shortages of staple food products, with 12-month inflation often rising above 4 percent, the upper limit of a central bank target range.

Mexico's central bank kept its key overnight interest rate steady at 7 percent at its last monetary policy meeting on Feb. 23, but clearly warned it would raise interest rates if inflation did not begin to ease in March.

Guemez's comments reinforced that message.

Twelve-month headline inflation was 4.11 percent in February, up from 3.95 percent in January.

However, investors expect the bank to wait for inflation data for the first half of March, due on March 22, to decide whether to raise interest rates at their next monetary policy meeting the following day.



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