By Brendan O'Boyle and Anthony Esposito
MEXICO CITY (Reuters) -The Bank of Mexico's five-member board unanimously held the key interest rate at 11.25% for a sixth straight monetary policy meeting on Thursday, as expected, saying progress on slowing inflation had been made even as the outlook remained challenging.
Banxico, as the bank is known, repeated previous guidance that it would need to maintain the benchmark rate at its current level "for some time" in order to bring inflation to its 3% target, plus or minus one percentage point.
Thursday's statement "retained its hawkish bias," Capital Economics' Deputy Chief Emerging Markets Economist Jason Tuvey said in a note.
"The likelihood that Banxico will begin an easing cycle at the next meeting in February has diminished but, regardless of the exact timing of the first cut, the bigger picture is that interest rates are likely to come down slowly," Tuvey said.
A discussion of rate cuts is expected to start in the first quarter of the new year, after multiple members of Banxico's board proposed doing so at its November meeting.
Banxico's decision to hold the key rate steady came a day after the U.S. Federal Reserve left interest rates unchanged, with Fed chief Jerome Powell saying a historic monetary policy tightening cycle was likely over.
Compared to Latin American peers, Banxico's board has been reluctant to signal the start of a rates-cutting cycle, even as regional neighbors Brazil and Chile cut rates in the face of easing inflation.
The central bank, which began a rate hiking cycle in June 2021, has held the key rate at its current level since its last increase in March.
Mexico's inflation outlook "remains complicated" but "progress on disinflation has been made," the Mexican central bank said, keeping a prior forecast that inflation would converge to target in the second quarter of 2025.
Annual headline inflation in Mexico, Latin America's second-largest economy, slowed to its lowest level since February 2021 in October, hitting 4.26%, before ticking up in November to 4.32%.
The closely watched core index, however, considered a better gauge on price trends because it strips out some volatile products, eased in November to 5.30%.
(Reporting Brendan O'Boyle and Anthony Esposito; Editing by Lisa Shumaker)