(Bloomberg) -- Mexico’s annual inflation slowed more than expected for in September, likely helping to keep a third straight interest rate cut in play at the central bank’s next meeting.
Consumer prices rose 4.58% from a year earlier, below the 4.61% median estimate of analysts surveyed by Bloomberg, the national statistics institute reported Wednesday. The annual reading has slowed more than expected for two straight months, but remains above the bank’s target range of 3% plus or minus 1 percentage point. From the previous month, prices rose 0.05%.
Core inflation, which excludes volatile items such as fuel, came in slightly below estimates at 3.91%.
Banxico, as the central bank is known, reduced borrowing costs for a second straight meeting to 10.5% on Sept. 26 as inflation readings are easing faster than expected and the economy heads for a third year of slower growth.
Banxico in August cut its gross domestic product forecast for 2024 to 1.5% from 2.4% just three months earlier, suggesting activity and demand that have helped sustain stubbornly high inflation readings are now weakening.
The bank’s September decision was split, with Deputy Governor Jonathan Heath as the lone member voting to keep the rate at 10.75%. Heath had also voted to keep the rate unchanged at the August meeting, where he was joined in dissent by colleague Irene Espinosa.
Economists in the most recent Citi survey published on Oct. 7 expect that inflation this year will end at 4.44% and in 2025 will slow to 3.81%. Their prediction for 2024 economic growth matches the central bank’s 1.5% call.
--With assistance from Maya Averbuch and Rafael Gayol.
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