Mexican headline inflation seen slowing in early February

By Thomson Reuters Feb 19, 2024 | 1:08 PM

MEXICO CITY (Reuters) – Mexico’s headline inflation rate likely eased in the first half of February, a Reuters poll showed on Monday, reinforcing bets that the country’s central bank could soon lower its key benchmark interest rate for the first time since 2021.

A median forecast of 13 analysts predicted that the annual headline inflation rate would settle at 4.70% for the first 15 days of the month, which would mark the continuation of a downward trend that was briefly interrupted at the end of last year.

The expected rate of rising consumer prices, however, still hovers above the central bank’s target of 3%, plus or minus 1 percentage point.

The closely watched core inflation index, which strips out volatile energy and food prices, is seen falling to 4.67% in early February, its lowest level since July 2021.

The Bank of Mexico’s five-member board held the benchmark interest rate at 11.25% for a seventh straight time in the last meeting, while hinting a rate cut could be considered during upcoming meetings.

The central bank, known as Banxico, began a rate hiking cycle in June 2021, but it has held the key borrowing rate at its current record-high level since last March.

A recent Citibanamex survey showed that a large part of the market anticipates a rate cut at the next monetary policy announcement set for March 21.

On a month-over-month basis, Mexico’s consumer prices were seen rising 0.15% in the first half of February, with core inflation up 0.28%.

Mexico’s national statistics agency will publish official inflation data for the first half of February on Thursday.

(Reporting by Noe Torres; Additional reporting by Gabriel Burin; Editing by Sandra Maler)