MEXICO CITY Mexico's central bank is expected to hold its main interest rate steady next Friday and policymakers are likely to brush off higher inflation as they look to support an economic recovery, a Reuters poll showed on Friday.
All 19 analysts surveyed expect the central bank to hold its main interest rate at a record low of 3.50 percent on March 21.
Annual inflation in Mexico cooled off an eight-month high in February as the effect of new taxes from a fiscal reform eased, underpinning chances the central bank will keep interest rates on hold this year.
The central bank lowered borrowing costs in September and October after an economic contraction in the second quarter and policymakers are expected to keep rates steady amid a tepid recovery in U.S. demand for Mexican exports.
The median of analysts now projects the central bank will raise its benchmark rate to 3.75 percent in the first quarter of 2015, on par with estimates in a poll released in January.
(Reporting by Jean Luis Arce; Editing by Alexandra Alper)