* Colombia to keep rates at 13.25% in next meeting- poll * Banxico likely to hold rates as Mexican inflation remains above target * Latam FX falls 0.8% for the week, stocks down 2.5% * MSCI EM stocks index sees weekly decline of 2.1% (Updated at 1945 GMT) By Johann M Cherian, Amruta Khandekar and Lisa Pauline Mattackal Sept 22 (Reuters) - Mexico's peso rose against the dollar on Friday, outperforming regional peers as inflation data raised the case for its central bank to keep interest rates at record highs, even as most Latin American currencies and stocks were set for weekly declines on worries about the impact of globally higher interest rates. Mexico's peso climbed 0.25% as investors eyed potentially still attractive rates, while MSCI's gauge of Latin American currencies slipped 0.2% against a stronger dollar at XXX GMT. Mexico's headline inflation slowed to 4.44% in the first half of September but remained above the central bank's target of 3%, fueling expectations that the central bank will hold its key interest rate at its record high level of 11.25%. "The Central Bank of Mexico is unlikely to consider any interest rates cuts until the second half of 2024... at this moment there is a steadiness and it makes no sense for them to exercise any loose monetary policy," Juan Perez, director of trading at Monex said. The Latam currency index was headed for weekly losses of 0.8% after a rollercoaster week where the U.S. Federal Reserve emphasized that interest rates will likely remain "higher for longer," though regions like Mexico could still offer attractive upside. "The Federal Reserve is higher for longer because the U.S. economy is stronger than expected, how does that not benefit Mexico?" said Geoff Yu, senior market strategist at BNY Mellon. Yu noted that Latin American currencies would likely remain attractive to investors despite higher developed market rates as "there's more than enough of a rate buffer now in LatAm to offset whatever the Fed can offer." The central banks of Mexico and Colombia meet next week, with both expected to hold interest rates steady although some policymakers in Colombia have clashed over whether a rate cut would be appropriate. Colombia's peso fell 1.28% in its biggest daily decline in over a month. Brazil's real was flat on the day, Chile's peso lost 0.45% and the Peruvian sol also slipped 0.2%. Chile's central bank said that inflation risks have "decreased significantly" in minutes of its latest meeting when it cut interest rates by 75 basis points. Latin American stocks slipped 0.6%, with the index set for weekly losses of 2.5%. MSCI's index of global emerging markets stocks picked up 0.8%, recouping some losses after falling to a six-month low on Thursday, but saw its worst weekly decline in over a month with losses of 2.1%. Key Latin American stock indexes and currencies at 1945 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 963.96 0.81 MSCI LatAm 2330.74 -0.56 Brazil Bovespa 116041.88 -0.09 Mexico IPC 51697.78 -0.49 Chile IPSA 5831.95 -0.44 Argentina MerVal 554510.44 0.136 Colombia COLCAP 1090.53 -0.46 Currencies Latest Daily % change Brazil real 4.9310 0.01 Mexico peso 17.1817 0.25 Chile peso 892 -0.45 Colombia peso 3998.5 -1.28 Peru sol 3.7361 -0.20 Argentina peso (interbank) 350.0000 0.01 Argentina peso (parallel) 740 0.68 (Reporting by Johann M Cherian, Amruta Khandekar and Lisa Mattackal in Bengaluru)
