January 12, 2015 / 7:41 PM / 5 years ago

Prolonged Mexico peso weakness could impact inflation-Sanchez

MEXICO CITY, Jan 12 (Reuters) - Prolonged weakness of Mexico’s peso could have an impact on inflation but lower fuel prices, cheaper phone bills and favorable tax effects will likely help reduce annual inflation in the short-term, a top Central Bank official said on Monday.

Central Bank Deputy Governor Manuel Sanchez said in a presentation added downside risks to Mexican economic growth include a continued decline in oil output and prices, as well as social unrest that stems from long-running drug gang violence.

Mexico will probably have to raise interest rates this year, given the Federal Reserve’s own expected hike in U.S. borrowing costs, central bank governor Agustin Carstens said on Thursday.

Reporting by Mexico Newsroom

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