MEXICO CITY, Sept 21 (Reuters) - Mexico's central bank is expected to hold interest rates steady on Monday to support a sluggish economy but policymakers will likely keep signaling they are prepared to raise rates if a slump in the peso hits inflation.
Nineteen of 21 analysts polled by Reuters on Friday expect the Banco de Mexico to hold its key rate at a record low of 3.00 percent.
Last Thursday, the U.S. Federal Reserve kept interest rates unchanged but left open the possibility of a modest policy tightening later this year.
Most analysts now expect Mexico's central bank will maintain its stance that it plans to lift borrowing costs when the Fed does. Two analysts expected a 25 basis point hike after Mexico said it could even move first in a bid to defend the peso.
Mexican policymakers, in their last meeting in late July, increased dollar sales to support the peso and said they were ready to raise rates ahead of the Fed if currency weakness threatened inflation expectations or financial stability.
The peso has hit successive lows this year on concerns that higher U.S. rates will sap demand for riskier assets. However, so far foreign holdings of Mexican peso bonds have held around record highs while inflation has fallen to an all-time low.
The peso currency has pulled back from a record low of 17.31 per dollar hit last month to trade around 16.60 per dollar in the wake of the Fed's decision.
That gives Mexican policymakers room to leave Mexican borrowing costs steady to help the economy gain steam, analysts said. Last month, the government cut growth estimates for this year to around 2.4 percent due to falling oil output and patchy exports to the United States.
The majority of analysts polled now see a 25 basis point hike by Mexico in December. The central bank is due to issue its policy statement at 1 p.m. local time (1800 GMT) on Monday.
(Reporting by Michael O'Boyle; Editing by Chizu Nomiyama)