MEXICO CITY, Aug. 2 (Xinhua) -- Inflationary pressure in Mexico may continue to rise in part due to uncertainty surrounding the renegotiation of the North American Free Trade Agreement (NAFTA), the central Bank of Mexico (Banxico) said Thursday.
In its monetary policy statement, Banxico said the Mexican peso could also see pressure from higher international interest rates coupled with a strong U.S. dollar.
"There is also a risk that U.S. foreign trade policy measures will lead to an escalation in protectionist and retaliatory measures that adversely affect inflation behavior," the bank said.
"The risk balance with regard to the trajectory of inflation maintains an upward tendency," it added.
Mexico's annual inflation rate was running at 4.85 percent through the first half of July, according to the most recent figures available from the National Institute of Statistics and Geography (INEGI).
The figure exceeded the bank's inflation target of 3 percent, with a one-point variation up or down.
Banxico said that since June, there have been signs of inflation that may affect prices over the next 12 months.
What's more, Banxico predicted that growth in the country's economy could fall in the lower portion of the expected range, between 2 and 3 percent.
"Faced with the uncertainty resulting from the complex environment that the economy is facing, (growth) is considered to be on the downside," Banxico said.
In spite of the inflation risks, Banxico's governing board decided on Thursday to maintain the interest rate at 7.75 percent, which is the highest level in nine years.
