May 7, 2013 / 4:26 PM / in 5 years

UPDATE 1-Mexico price shocks transitory, inflation to slow-Carstens

MEXICO CITY, May 7 (Reuters) - Recent Mexican price shocks are transitory, expectations are well anchored and inflation should fall below 4 percent relatively quickly, Mexico’s Central Bank Governor Agustin Carstens said on Tuesday.

“The external prices of some goods have pressured the prices of some agricultural products, we have also received shocks,” Carstens told an insurance conference.

“At the Banco de Mexico, we are very vigilant about these events. We think that these shocks are transitory, and do not imply a generalized increase in prices,” he added.

Carstens said the bank expected inflation to continue to trend toward its 3 percent policy horizon target.

“They are not affecting the inflation dynamic, so we expect these price increases to revert and for inflation to converge below 4 percent relatively soon.”

Carstens said Mexican companies should take advantage of investor appetite to issue more debt. And structural reforms will help economies retain capital when the interest rates of advanced economies rise, he added.

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