Mexico’s Inflation Rate and Interest Rate Outlook

MEXICO CITY (Reuters) – Mexico’s annual inflation rate likely fell again in September, according to a Reuters poll of analysts, raising expectations that the central bank will continue cutting its benchmark interest rate.

The median estimate from 10 analysts predicts the overall consumer price index (CPI) for September to drop to 4.62%, its lowest level since March, although still above the bank’s target rate of 3%, plus or minus a percentage point.

Core inflation, which excludes some volatile food and energy prices, probably eased in September to 3.96%, marking the 20th consecutive month of decline.

Last month, the central bank cut its benchmark interest rate for the third time this year, reducing it to 10.50%. The bank’s board indicated that decreasing prices may allow for further reductions in borrowing costs.

Central bank Governor Victoria Rodriguez mentioned last week that future cuts could be larger if the inflation rate continues to decrease.

In September, consumer prices likely increased by 0.09% from the previous month, while core prices are expected to have risen by 0.32%, according to the poll.

Mexico’s central bank has two more monetary policy decisions scheduled later this year on Nov. 14 and Dec. 19. The latest survey of analysts suggests that most expect the benchmark interest rate to end the year at 10% and decrease to 8% in 2025.

The national statistics institute INEGI will release official consumer price data for September on Wednesday.