• Aug. 19, 2017, 2:29 am

Mexico central bank seen holding rates steady on June 4: Reuters poll

MEXICO CITY (Reuters) – Mexico’s central bank is expected to hold borrowing costs at a record low next week following weak growth in the first quarter and a deep slump in the peso that has not fanned inflation, analysts surveyed by Reuters said on Thursday.

All 15 analysts polled by Reuters expect the Banco de Mexico to hold its key rate at 3.00 percent on June 4.

Policymakers have held borrowing costs steady since the middle of last year.

Data last week showed Mexico’s annual inflation rate cooled in early May to more than a nine-year low of 2.93 percent, dampening concerns that a slump in the peso to a record low in March could fan price pressures.

The central bank last week said inflation will be slightly below its 3 percent target during the second half of the year and it cut its growth forecast, saying that a sluggish economy will help contain price pressures.

Latin America’s No. 2 economy grew at its slowest pace in over a year in the first quarter, undermined by flagging oil revenue and weak U.S. growth.

The median expectation of the poll showed analysts now expect the hiking cycle to begin in the fourth quarter, with the benchmark rate ending the year at 3.50 percent. A prior poll saw the rate ending the year at the same level, but forecast a 25 basis point increase in the July to September period.

Seven of 15 analysts expect two 25 basis point hikes in the fourth quarter.

The central bank will issue its policy statement at 1 p.m. local time (2 p.m. EDT) next Thursday.

(Reporting By Alexandra Alper; Editing by Chizu Nomiyama)

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