(Adds comments from Bank of Mexico) MEXICO CITY, March 25 (Reuters) - Mexico’s central bank on Thursday kept its key interest rate unchanged at 4.0% as expected, boosting the peso currency, and said inflation will now likely be slightly higher than previously forecast in the coming months. Fourteen out of 23 analysts surveyed by Reuters had expected the Bank of Mexico (Banxico) to hold the key rate at 4.0% after its 25 basis point cut in February. The other nine analysts had predicted another 25 basis point reduction. Although Banxico holding rates steady had been the consensus forecast, the unanimous decision by the bank’s five-member board lifted the peso, which was up by more than 1.5% against the dollar at one point before paring some of its gains. “The anticipated paths for headline and core inflation in the short term are slightly above those foreseen in the (bank’s) last quarterly report,” Banxico wrote in a statement. Last year’s fall in energy prices would likely have a temporary impact on inflation, the central bank said. However, it noted that both headline and core inflation should converge to the bank’s 3% target as of the second quarter of 2022. “The unanimous decision by Banxico’s board to keep its policy rate at 4.00% is a clear signal that its easing cycle is done and dusted,” Nikhil Sanghani, an analyst at Capital Economics, said in a client note. “While this indicates a cautious shift on Banxico’s board, we think that investors are misplaced in expecting a tightening cycle to get underway later this year.” Banxico, which targets inflation of 3% with a one percentage point tolerance threshold above and below that, said an uncertain outlook meant risks for inflation, growth and financial markets pose major challenges for monetary policy. “It is necessary to enable an orderly adjustment of financial conditions and a change in relative prices, without affecting price formation and inflation expectations,” it said. Mexican annual inflation accelerated faster than expected in the first half of March to reach a rate of 4.12%, its highest level in almost two years. (Reporting by Dave Graham and Anthony Esposito Editing by Marguerita Choy)