UPDATE 1-Mexican inflation holds steady, fueling hopes for rate cuts

(Adds details from report)

MEXICO CITY, Nov 7 (Reuters) - Mexican inflation stayed close to the central bank’s 3% target in October, according to official figures released on Thursday, fueling expectations of further interest rate cuts.

The national consumer price index rose 3.02% in the year through October, according to the national statistics institute, INEGI. The rate slightly exceeded the projection of analysts in a Reuters poll and 3% inflation recorded in September.

Inflation was fueled by an increase in electricity rates as a result of the end of government subsidies for the hot season.

The report marks the fifth month that inflation has fallen within striking range of the central bank’s target, financial group Monex wrote in a note to investors.

“We believe that the scenario is favorable for the central bank to cut its rates by 25 basis points during its next meeting on November 14,” Monex said.

The Bank of Mexico cut its benchmark lending rate for the second time in a row at the end of September, to 7.75%, citing a decrease in inflation and the stagnation of the local economy.

Consumer prices rose 0.54 percent in October, according to non-seasonally adjusted figures.

The core index, which strips out some volatile food and energy prices, rose 0.25 percent during the month.

Reporting by Miguel Gutierrez; writing by Julia Love; Editing by Bernadette Baum