MEXICO CITY (Reuters) – Mexico’s headline inflation rate likely eased in August after accelerating for the previous five months, a Reuters poll of analysts showed on Friday, boosting expectations that the Bank of Mexico will cut the benchmark interest rate later this month.
The median estimate from eight analysts forecast an annual headline inflation rate in August of 5.08%, down from July’s level of 5.57% but still far from the central bank’s target of 3.00%, plus or minus a percentage point.
The closely watched core inflation index, which excludes products with high volatility to better gauge price trends, is seen falling for the 19th straight month to 4.02%.
In August alone, consumer prices were estimated to have increased by 0.09% compared to the previous month, with core prices up 0.24%, according to the Reuters poll.
Annual headline inflation in Latin America’s second-largest economy had surged in recent months to a one-year high in July, even as core inflation eased, complicating the central bank’s effort to bring down borrowing costs.
The bank’s board cut its benchmark interest rate by 25 basis points in early August in a divided vote, with two of the bank’s five governors expressing concern that lowering the rate prematurely could impact the bank’s credibility.
The Bank of Mexico’s next monetary policy decision will be announced on Sept. 26.
