MEXICO CITY, Nov 30 (Reuters) - Mexico's central bank left interest rates unchanged at 4.5 percent on Friday, as expected, and backed away from a threat to raise the cost of borrowing 'soon' as policymakers predicted inflation would fall below their ceiling by year-end.

Following are key passages in Friday's monetary policy statement, issued by the central bank board, as compared with its previous statement in October, and interpretation on what the wording changes mean:

OCTOBER: If inflation persistent shocks persist, even if you assume that they are temporary, and a change in the trend of headline and core inflation is not confirmed, the board estimates that it could be appropriate to adjust rates upwards soon with the purpose of strengthening the anchoring of inflation expectations, preventing contamination to the rest of the processes of price formation in the national economy and not compromising the convergence of inflation to the permanent target of 3 percent.

NOVEMBER: If new shocks to inflation arise, even if they seem to be transient, and the trend change in overall inflation and core inflation is not consolidated, the board believes that it could be appropriate to raise the benchmark interest rate.

TAKEAWAY: Omitting the word 'soon' changes the statement from a real threat of action to normal rhetoric for an inflation-targeting central bank which wants to make sure inflation expectations do not start to creep up.

OCTOBER: Inflation is expected to decline further in the coming months and settle very close to 4.0 percent by the end of the year and to resume a trend converging at 3.0 percent in 2013.

NOVEMBER: Although it (inflation) is still above the upper bound of the range of variability of plus or minus one percentage point around the target of 3 percent, it is likely to finish at the end of the year below 4.0 percent.

TAKEAWAY: This is the first time the central bank has been confident enough to predict inflation will fall below its ceiling by the end of the year, a significant change.

OCTOBER: The balance of risks for growth in the Mexican economy has continued to deteriorate, reflecting the intensifying downside risks to the global economy and in particular for the U.S. economy.

NOVEMBER: All in all, based on developments abroad, in particular the U.S. economy, the view is that downside risks to Mexican economic growth have increased marginally in the short term.

TAKEAWAY: The growth outlook has deteriorated further, adding to the case against a rate hike.

OCTOBER: Given the intensity and persistence of the shocks that have affected food prices, risks to inflation in the short term have increased, particularly in an environment in which the output gap has closed. Elements that stand out as additional concerns, although not widespread, include negotiations that have registered some wage increases higher than they had been seen in the past, plus a return to volatility in international financial markets can not be ruled out.

NOVEMBER: Although inflation has remained at elevated levels for several months, there is so far no evidence to suggest widespread upward pressure on prices from the evolution of inflation expectations in the medium and long term, nor from the labor market ... Although in the short term major upside risks to inflation remain, it is considered that at the margin they have eased.

TAKEAWAY: Not only have inflation risks eased, but the central bank is also standing down on risks from accelerating wage growth, which it had specifically noted the month before.

(Reporting by Krista Hughes) Keywords: MEXICO ECONOMY/

(krista.hughes@thomsonreuters.com)(+52 55 5282 7147)(Reuters Messaging: krista.hughes.thomsonreuters.com@reuters.net)

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