Inflation in Mexico likely slowed in early October: Reuters poll

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MEXICO CITY (Reuters) -Mexico’s annual inflation rate likely slowed in the first half of October, a Reuters poll showed on Monday, supporting bets the central bank of Latin America’s second-largest economy will continue to cut its benchmark interest rate through the end of this year.

The median average forecast of 11 analysts polled by Reuters suggested annual inflation likely edged down to 3.7% in the period, after four consecutive fortnights of increases.

Core inflation, an index that strips out highly volatile products, likely dropped to 4.24%, the poll found, which would mark its lowest annual level since the first half of August.

These forecasts would lift headline inflation by 0.35% and core inflation by 0.19% compared to the prior two weeks.

Mexico’s statistics agency is set to release the official data on Thursday.

Mexico’s central bank last month cut its benchmark rate for the tenth consecutive time, bringing it down to 7.5%. The central bank’s board is expected to consider further cuts going forward.

It did not say how big the coming cuts would be, but the market expects quarter-percentage-point reductions in each of its rate decisions next month and in December, which would bring the benchmark rate to 7% by the end of 2025.

The bank’s Deputy Governor Jonathan Heath, who has opposed recent rate cuts from inside the board, said in a recent interview that the central bank should not rush rate cuts until it is certain inflation is resuming a clear downward trend.

(Reporting by Gabriel Burin in Buenos Aires; Writing by Noe Torres and Sarah Morland; Editing by Paul Simao)