MEXICO CITY (Reuters) – Mexico’s annual inflation rate likely ticked up in April but remained within the central bank’s target, a Reuters poll of analysts showed on Monday, supporting expectations that the central bank will continue cutting its benchmark interest rate.
The median estimate from 16 analysts was for the year-on-year headline inflation rate for April to rise to 3.90% from 3.80% in March. Mexico’s central bank has an official target rate of 3%, plus or minus a percentage point.
Core inflation, considered a better indicator of price trends because it strips out some especially volatile food and energy prices, likely also accelerated in April, to 3.92% from 3.64% in March.
In April alone, consumer prices likely edged up 0.30% from the previous month while core prices are expected to have risen 0.47%, according to the poll.
In March, the central bank cut its benchmark interest rate by 50 basis points, bringing it down to 9%. The bank’s board said it expects the inflationary environment to allow it to keep cutting borrowing costs.
Banxico, as the central bank is known, will announce its next monetary policy decision on May 15.
Although economic growth is not part of Banxico’s mandate, analysts believe a weak economic outlook stemming from global trade tensions could encourage policy makers to continue monetary easing.
Mexico’s economy avoided a technical recession by surprisingly growing by 0.2% between January and March, compared to a 0.6% contraction the previous quarter.
The government sees the economy growing between 1.5% and 2.3% this year, according to a draft budget from the finance ministry. Private sector analysts polled by the central bank late last month lowered their growth forecast to just 0.20% from 0.50% previously. They also nudged up their year-end inflation estimate to 3.8% from a previous estimate of 3.7%.
National statistics institute INEGI will release official inflation data for April on Thursday.
(Reporting by Adriana Berrera; Additional reporting by Gabriel Burin)
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