Mexico's inflation slows for 7th fortnight in a row, rates still seen on hold
Reuters
Published Aug 24, 2023 08:41AM ET
Updated Aug 24, 2023 09:21AM ET
By Gabriel Araujo
(Reuters) -Mexico's headline inflation slowed in early August for the seventh consecutive two-week period, official data showed on Thursday, meeting market expectations as the country's central bank has signaled an "extended" period of high interest rates.
In Latin America's second-largest economy, the headline inflation rate hit 4.67% in the 12 months through early August, down from 4.79% at the end of July and its lowest since March 2021, data from statistics agency INEGI showed.
The latest number, in line with projections from economists polled by Reuters but still above the central bank's target, is likely to reinforce bets it will hold its key lending rate steady at an all-time high of 11.25% for longer.
"The headline inflation rate declined further, but sticky services inflation will remain a concern for the central bank," Capital Economics' emerging markets economist Kimberley Sperrfechter said in a note to clients.
"This, alongside hawkish comments from officials, means that Banxico will be the last major central bank in the region to ease monetary policy, around the turn of the year, and interest rate cuts will be more gradual than most currently anticipate."
Regional peers Brazil and Chile have already kicked off easing cycles.
Meanwhile, the Bank of Mexico voted earlier this month to hold its benchmark interest rate at 11.25% for the third consecutive time, warning it would be necessary to maintain it for an "extended" period to meet its inflation target of 3%, plus or minus one percentage point.
Banxico, as the monetary authority is also known, hiked interest rates by a total of 725 basis points between June 2021 and March 2023 to tame high inflation.
Mexico's closely watched core price index, which strips out some volatile food and energy prices, reached 6.21% in the year through the first half of August, INEGI said, slightly below the 6.23% expected by economists.
In the fortnight alone, the agency added, headline prices climbed 0.32% while the core index was up 0.19%.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.