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Mexico central bank seen holding interest rate steady in July
July 4, 2014 / 7:37 PM / in 3 years

Mexico central bank seen holding interest rate steady in July

MEXICO CITY (Reuters) - Mexico’s central bank is likely to hold its main interest rate steady at a record low next Friday to support a rocky economic recovery after a surprise rate cut last month, a Reuters poll showed on Friday.

Mexico's Central Bank Governor Agustin Carstens tests a microphone during a forum organized by Mexico's Central Bank in Mexico City October 14, 2013. REUTERS/Tomas Bravo

All 24 analysts surveyed by Reuters expect the central bank to hold its main interest rate at 3.00 percent on July 11. The bank will issue its decision on Friday at 9 a.m. local time (1400 GMT).

Mexico’s central bank unexpectedly slashed interest rates by 50 basis points in June, saying the sluggish economy gave it room for a one-off cut to spur growth without fanning inflation pressures.

Annual inflation accelerated for the first time in five months in early June to 3.71 percent, but stayed within the central bank’s tolerance zone, backing bets for steady interest rates ahead.

Latin America’s No. 2 economy only grew 0.3 percent in the first quarter compared to the last period of 2013, pushing the government to cut back its expectations for annual growth in 2014 from 3.9 percent to 2.7 percent.

Analysts polled by the central bank expect growth of just 2.65 percent this year.

The median forecast of analysts surveyed by Reuters is for the central bank to raise its benchmark rate 25 basis points in the second quarter of 2015, on par with a prior poll.

Reporting by Jean Luis Arce; Writing by Alexandra Alper

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