By Brendan O'Boyle

MEXICO CITY Mexico's central bank raised its economic growth forecasts for 2023 and 2024, citing the Latin American economy's resiliency, but remained firm that a cut to the country's record high interest rate was not likely any time soon.

Banxico, as Mexico's central bank is known, raised its 2023 growth forecast to 3.0% in its quarterly report on Wednesday, up from 2.3% in its previous report. It also revised its 2024 economic growth forecast to 2.1%, up from 1.6%.

Banxico's board pointed in the report to Mexico's strong labor market and domestic spending as contributing to the economy's "resiliency."

The report, however, repeated previous language that the governing board would need to hold its benchmark interest rate at its all-time high for an "extended period" in order to bring stubborn inflation down to the bank's target range.

For Alberto Ramos, chief Latin America economist at Goldman Sachs, the report shows that Mexico's economy is "running hot," underscoring a need for a "conservative calibration of monetary policy."

"The central bank needs to maintain a restrictive monetary stance to slightly cool off the economy and support the ongoing inflation dynamics," Ramos said in an analysis note.

Banxico held Mexico's benchmark interest rate steady at 11.25% earlier this month for the third consecutive time after annual inflation slowed for the sixth straight month in July to 4.79%.

Falling inflation elsewhere in Latin America has spurred central banks to begin rate cuts, including in Brazil and Chile.

But in Mexico, "the discussion of whether we are going to reduce the interest rate is not on the table yet," Banxico Governor Victoria Rodriguez said during the report's presentation.

Banxico's board needed more time and stronger evidence that inflation was consolidating to its target, she added.

Wednesday's report also warned that despite its revisions to economic growth, "a slowdown in economic activity is still anticipated ... in line with the expected behavior of the U.S. economy."

The bank also slightly lowered its headline inflation forecast for the last quarter of 2023 to 4.6% from 4.7% previously.

However, it slightly raised its core inflation forecast for the quarter to 5.1%, from 5.0% previously.

(Reporting by Brendan O'Boyle; Editing by Jonathan Oatis and Stephen Coates)