November 9, 2017 / 3:30 PM / a year ago

UPDATE 1-Mexican inflation rises unexpectedly; rate cut in doubt

 (Updates with details, cenbank meeting)
    MEXICO CITY, Nov 9 (Reuters) - Mexico's annual inflation
rate              quickened slightly in October, with consumer
prices rising by a more-than-expected 6.37 percent, the
government said on Thursday, making an interest-rate cut even
less likely at a central bank meeting later in the day. 
    The consumer price increase exceeded the 6.34 percent rate
forecast in a Reuters poll of analysts. In September, the first
month the annual rate had come down since June 2016, prices rose
6.35 percent.
    Mexico's central bank board will meet later on Thursday for
its monetary policy meeting. A Reuters poll on Tuesday showed
analysts expected inflation to ease and that the Banco de Mexico
would keep the benchmark interest rate unchanged at 7
    The central bank has repeatedly said it is too soon to cut
rates, given still-high consumer prices, and Thursday's
inflation numbers may support that view.
    While many private economists believe Mexico could start
lowering rates early next year, some say they could rise in the
December monetary policy meeting.
    "The pickup in Mexican inflation last month appears to be
due in large part to temporary factors relating to September’s
earthquakes," Capital Economics said in a note. "Nevertheless,
the data strengthen the case for delaying interest rate cuts
until the second half of next year." 
    Mexico's benchmark interest rate is at its highest since
early 2009 as the central bank tries to counter a spike in
inflation well above its 3 percent target. It says it expects
inflation to ease in the coming months and head toward 3 percent
during the second half of next year.
    The rate decision at 1900 GMT will be the last such meeting
presided over by Banco de Mexico Governor Agustin Carstens. His
replacement has not yet been announced. 
    Consumer prices              rose 0.63 percent in October
from September, according to non-seasonally adjusted figures,
more than the 0.60 percent forecast in the Reuters poll.
     The core index, which strips out some volatile food and
energy prices, rose 0.25 percent during the month             ,
in line with analysts polled by Reuters. 

 (Reporting by Gabriel Stargardter; Editing by Frank Jack Daniel
and Lisa Von Ahn)
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