September 28, 2017 / 6:50 PM / a year ago

UPDATE 1-Mexico central bank leaves interest rates steady, eyes quake impact

(Adds comments, background on recent rate moves)

MEXICO CITY, Sept 28 (Reuters) - Mexico’s central bank held borrowing costs steady on Thursday, saying that although prices of certain products could spike after recent earthquakes, such effects would be temporary and that recent interest rate hikes were helping slow inflation.

The board of Banco de Mexico unanimously decided to leave unchanged its benchmark rate at 7.0 percent as expected by all 21 analysts surveyed in a Reuters poll.

The central bank has now held the rate steady for two straight meetings. Prior to that it hiked at its previous seven meetings, taking the main rate to a more than eight-year high.

It lifted it by 400 basis points since the end of 2015 to counter a spike in inflation, which was fanned by repeated slumps in the peso.

“General annualized inflation seems to have hit a ceiling, not including the potential effect of the earthquakes, which should be short-term and temporary, and we expect inflation to show a downward trend,” said the bank in its post-meeting statement.

Two powerful earthquakes this month killed more than 430 people, destroyed thousands of homes and produced billions in economic losses. (Reporting by Michael O’Boyle & Christine Murray; Writing by Anthony Esposito; Editing by James Dalgleish)

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