Economy

Mexico’s Inflation Expected to Ease in August Following Months of Acceleration: Reuters Poll

MEXICO CITY – Mexico’s headline inflation rate is expected to have decreased in August after rising for five consecutive months, according to a recent poll of analysts. This development has heightened expectations that the Bank of Mexico may lower its benchmark interest rate later this month.

The median forecast from eight analysts predicts an annual headline inflation rate of 5.08% for August, down from July’s 5.57%. However, this figure remains significantly above the central bank’s target of 3.00%, with a permissible variation of one percentage point.

The core inflation index, which omits volatile items for a clearer view of price trends, is anticipated to fall for the 19th consecutive month, reaching 4.02%.

In terms of monthly changes, consumer prices are estimated to have risen by 0.09% in August, with core prices increasing by 0.24%, based on the analyst poll.

In recent months, annual headline inflation in Mexico, the second-largest economy in Latin America, peaked at a one-year high in July, despite a decline in core inflation. This situation has complicated the central bank’s efforts to reduce borrowing costs.

Earlier in August, the Bank of Mexico’s board voted to cut the benchmark interest rate by 25 basis points, a decision that was not unanimous. Two of the five bank governors expressed concerns that a premature rate cut could undermine the bank’s credibility.

The Bank of Mexico is set to announce its next monetary policy decision on September 26.

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