By Michael O'Boyle
MEXICO CITY Feb 14 The majority of Mexico's
central bankers board expect a recent spike in inflation will
soon abate, minutes released on Friday showed, but they said
they were monitoring the risk that a weak peso could fan
consumer prices higher.
Central Bank board members voted 5-0 at their Jan. 31
meeting to hold their benchmark rate at a record
low of 3.50 percent despite a surge in inflation.
Most of the policymakers said there was no evidence that new
taxes were spurring wider price pressures, backing expectations
that the central bank will hold interest rates steady this year
to support a recovery in Latin America's No. 2 economy.
However, the majority said they were monitoring the risk
that a global sell-off in emerging market assets could further
hurt the peso and add to consumer price pressures.
Mexico has stood apart from other emerging markets such as
Brazil and Turkey, which are raising interest rates to prop up
their currencies and counter the risk that higher import prices
will push up inflation.
"All members agreed they would closely follow the impact of
tax reform on inflation," the minutes said. The entire board
also agreed they would raise interest rates if they saw recent
tax hikes spurring wider price pressures.
Banco de Mexico Governor Agustin Carstens said on Wednesday
that inflation had likely peaked in the first half of January
even as policymakers said consumer prices would be higher this
year than they forecast back in November.
Consumer price inflation in Latin America's No. 2 economy
rose to an eight-month high of 4.48 percent in January due
mostly to a new tax on soft drinks, surging past the central
bank's limit of 4 percent.
The central bank said in its report that annual inflation
would remain above 4 percent in the first months of 2014 but
that it would fall below that level toward the end of the year.
A Banamex poll last week showed the median estimate is for
the central bank to raise rates in March 2015.