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By Jean Arce
MEXICO CITY Jan 10 An uptick in December
inflation in Mexico is due to transitory factors and will not
prompt the bank to shift its monetary policy, Central Bank
Governor Agustin Carstens said on Friday.
Inflation quickened to a 6-month high in December after the
bank cut its benchmark interest rate three times to an all-time
low of 3.5 percent last year to counter a slowdown.
Speaking at an event in Mexico City, Carstens said much of
December's inflation rise was due to increases in some regulated
prices resulting from the government's policy to slowly reduce
its gasoline subsidy and a decision to raise metro fares in the
Still, Carstens said he expects inflation to quicken to
above 4 percent - the central bank's tolerance ceiling - in the
coming months as a fiscal reform approved last year takes
effect, leading to new taxes on junk food, sodas and fuel.
"We'd like to see a convergence towards 3 percent, but this
definitely won't be achieved this year due to the impact of
fiscal measures," Carstens said.
In a presentation posted to the central bank website,
Carstens reiterated his view that inflation will reach 3.5
percent by year-end before trending down to the bank's target of
3 percent in 2015.
Carstens continued to forecast a rebound in economic
activity, but added that the output gap would remain in negative
territory, meaning no growth-related inflationary pressures.
Mexico likely grew just 1.3 percent last year, according to
the finance ministry, but the central bank has forecast growth
of 3 to 4 percent in 2014.
(Reporting by Jean Arce; Editing by Meredith Mazzilli)