MEXICO CITY, June 6 Mexico's central bank is
seen holding its main interest rate steady on Friday and
policymakers may signal a readiness to lower borrowing costs if
the economy weakens.
All 21 analysts surveyed last week by Reuters expect the
central bank to hold its benchmark rate at a record
low of 3.50 percent in a policy announcement set for 9 a.m.
local time [1400 GMT].
Latin America's No. 2 economy only grew 0.3 percent in the
first quarter compared to the last three months of 2013, pushing
the government last month to cut back its expectations for
annual growth in 2014 from 3.9 percent to 2.7 percent.
Economists expect the central bank, which has cut back its
own growth forecast, will voice more concerns about the economy
while arguing that inflation pressures remain tame.
"The bank will leave the door open to the possibility that
there could be a cut if economic data deteriorates even more,"
said Alexis Milo, an economist at Deutsche Bank in Mexico City.
Milo expects economic data will show a stronger recovery in
the coming months, however, eventually pushing any rate cut back
off the table.
Annual inflation has been falling since it spiked above the
central bank's 4 percent limit in January, largely due to new
taxes on soft drinks and fast food. Fading price pressures give
policymakers room to leave borrowing costs low.
Surprisingly weak growth in the first quarter has pushed
economists to expect the central bank will wait longer before
raising borrowing costs.
The median forecast of analysts surveyed by Reuters is for
the central bank to raise its benchmark rate to 3.75 percent in
the second quarter of 2015. That compared with previous
projections for a hike in the first quarter.
(Reporting by Michael O'Boyle; Editing by Tom Brown)