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UPDATE 1-Mexico central bank eyes persistent inflation, peso risks -minutes

Kitco News

(Recasts with risks, adds central bank comments)

MEXICO CITY, Feb 22 (Reuters) - Most of Mexico's central bank board is concerned about persistent inflation pressures and risks that the peso could be hammered, adding to consumer price pressures, minutes from the bank's latest policy meeting showed on Thursday.

Banco de Mexico's governing board unanimously voted to hike the key rate by 25 basis points on Feb. 8 to 7.50 percent, its highest level since February 2009.

Most board members are concerned that recent shocks to consumer prices could slow a projected drop in annual inflation back to policymakers' 3 percent target, the minutes showed.

February's hike was the second since Governor Alejandro Diaz de Leon took over in December, and the first decision with a full five-member board after Irene Espinosa was approved in January by lawmakers as the first woman to serve on the team. Most board members were concerned that the risks to inflation were tilted upward, and said they expected the annual inflation rate to fall back to their target during the first quarter of 2019, which is slower than projected last year.

Mexican consumer prices rose less than expected in early February, official data showed earlier on Thursday, easing some of the pressure on the central bank to keep hiking interest rates. The majority of the board was concerned that worries about the renegotiation of the North American Free Trade Agreement (NAFTA), higher U.S. interest rates and jitters about the country's national elections in July could hit the peso.

A weaker peso could inflame price pressures by driving up the cost of imports.


(Reporting by Michael O'Boyle and Gabriel Stargardter; Editing by Tom Brown)

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