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POLL-Mexico’s central bank seen holding key interest rate steady

reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=MXCBIR%3DECI poll data

MEXICO CITY, Dec 14 (Reuters)Mexico’s central bank will hold its benchmark interest rate steady this week despite slowing inflation, as an economic recovery from the coronavirus pandemic gathers pace, a Reuters poll showed on Monday.

Eighteen of the 23 analysts and economists surveyed said they expect the Bank of Mexico to hold rates steady at 4.25%. The other five participants anticipate Banxico, as the central bank is known, will cut rates by 25 basis points.

Mexico’s economy grew 12.1% between July and September from the previous three-month period, benefiting from stimulus spending in the United States. Still, the economy shrank 8.6% from the same period a year earlier.

Meanwhile, consumer price inflation eased by more than expected in November to 3.33%, the lowest level in five months, as a prolonged period of traditional pre-Christmas discount promotions helped cool price pressures.

“The economy is already recovering and does not need more monetary support,” said Alfredo Coutino, an economist at Moody’s Analytics, who is among those polled who expect Banxico to keep rates steady.

“On the contrary, excess liquidity may start to drive inflation higher in an environment of an economic recovery,” Coutino added.

Banxico unexpectedly kept the key rate unchanged at 4.25% at its last monetary policy meeting, citing the need for a “pause” to weigh inflationary pressures as it held borrowing costs steady for the first time in nearly 1-1/2 years.

The bank will publish its monetary policy decision at 1:00 P.M. local time (1900 GMT) on Thursday.

(Reporting by Miguel Angel Gutierrez; Writing by Anthony Esposito; Editing by David Gregorio)

((anthony.esposito@tr.com; +5255 5282 7140;))

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