MEXICO CITY, Dec 1 (Reuters) - The Bank of Mexico on Wednesday raised its inflation forecast and lowered its growth expectations for this year, saying the balance of risks for inflation had deteriorated and were biased to the upside. Banxico, as the bank is known, projected gross domestic product growth of 5.4% for 2021, down from a prior view of 6.2%. It forecast 3.2% growth in 2022, up from a previous estimate of 3.0%. The balance of risks for growth are biased to the downside and those risks include a worsening of the pandemic that prompts new containment measures, as well as ongoing supply chain bottlenecks and higher input costs, Banxico said. Meanwhile, average annual headline inflation for the fourth quarter is seen at 6.8%, up from a previous forecast of 5.7%, Banxico added. Mexican inflation has continued to rise despite rate hikes. In annual terms, inflation rose faster than expected in the first half of November to more than 7%, the highest rate in over two decades and more than double Banxico"s inflation target of 3%, plus or minus a percentage point. Banxico raised its benchmark interest rate by 25 basis points for the fourth straight policy meeting on Nov. 11, taking it to 5.00% amid rising inflationary pressures.