April 23, 2014 / 5:01 PM / in 4 years

Mexico inflation seen cooling further in early April

MEXICO CITY, April 23 (Reuters) - Mexican annual inflation likely eased further in early April, backing expectations that policymakers will leave interest rates on hold this year to bolster a wobbly economic recovery.

Inflation for the 12 months through the first half of April was seen easing to 3.55 percent, according to the median of 10 analysts polled by Reuters, down from a 3.89 percent rate in the first half of March and a 3.76 percent rate for the full month.

Mexico’s central bank targets inflation of 3 percent with a 1 percentage point tolerance band. A jump in consumer prices, due mostly to new taxes on soft drinks and junk food, pushed inflation above the 4 percent limit in January and February.

Mexico’s central bank is expected to hold its main interest rate steady on Friday at a record low of 3.5 percent, as easing inflation pressures give policymakers room to leave borrowing costs low to support flagging growth.

Growth sank to a 4-year low of 1.1 percent last year and analysts polled by the central bank forecast growth of 3.09 percent for 2014.

The Reuters poll forecast that consumer prices fell 0.16 percent in the first half of the month. Core consumer prices, which exclude some volatile food and energy prices, were seen rising 0.09 percent.

The data is due on Thursday at 8 a.m. (1300 GMT) (Reporting By Noe Torres; editing by Andrew Hay)

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