(Add analyst comment, updates prices) By Bruno Federowski SAO PAULO, June 23 (Reuters) - Yields paid on Mexican interest-rate future contracts fell on Friday after the central bank signaled it would not increase borrowing costs any further. In an unexpectedly divided decision, Banco de México raised its benchmark rate by a notch to 7 percent, as forecast by all 17 analysts surveyed by Reuters last week. One member voted to hold rates. In its policy statement, the bank said "the reference rate has reached a level that is consistent with the process of efficient convergence of inflation to the 3 percent target," hinting that further increases are no longer necessary. "The market shows they could cut as soon as December, but we don't think the bank will move that fast," said Salvador Orozco, a strategist at Santander in Mexico City. Economists at Morgan Stanley said it was premature to expect cuts soon. "Mexico is still not out of the inflation woods," they wrote. Rate-future prices indicated a nearly 100 percent probability that the central bank will keep its reference rate at 7 percent in its August meeting and showed that the market is betting on a cut in December. The yield on Mexico's benchmark 10-year peso denominated bond bid down 27 basis points to 6.67 percent, its biggest one-day drop in two years. Despite fading expectations of further policy tightening, the Mexican peso strengthened 0.6 percent, tracking an increase in crude prices. Mexico is a major oil exporter. Brazil's benchmark Bovespa stock index slipped. Shares of power utility Centrais Elétricas Brasileiras SA fell nearly 5 percent as traders booked gains from a rally on Thursday triggered by optimism over its restructuring plans. Latin American stock indexes and currencies at 2115 GMT: Stock indexes daily YTD % Latest % change change MSCI Emerging Markets 1011.67 0.28 17.33 MSCI LatAm 2493.23 0.34 6.52 Brazil Bovespa 61087.14 -0.3 1.43 Mexico IPC 48980.78 -0.07 7.31 Chile IPSA 4766.20 0.19 14.81 Chile IGPA 23878.79 0.17 15.17 Argentina MerVal 21066.14 0.32 24.52 Colombia IGBC 10628.45 -0.13 4.94 Venezuela IBC 120565.95 -0.21 280.27 Currencies daily YTD % % change Latest change Brazil real 3.3385 -0.11 -2.68 Mexico peso 18.01 0.61 15.18 Chile peso 660.5 0.47 1.54 Colombia peso 3018.94 0.12 -0.58 Peru sol 3.255 0.15 4.88 Argentina peso (interbank) 16.1750 -0.09 -1.85 Argentina peso (parallel) 16.51 0.12 1.88 (Editing by Sandra Maler)
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