MEXICO CITY (Reuters) – Mexico’s annual inflation likely slowed in the first half of April, a Reuters poll on Tuesday showed, supporting chances that the central bank will again cut its key rate by half a percentage point in May.
The median estimate from 10 participants showed an annual headline inflation rate of 3.89% in the month’s first half, down from 3.93% in the second half of March.
Annual core inflation, considered a better measure of price trends because it excludes highly volatile products such as food and energy, is seen at 3.78%.
Prices are expected to have risen 0.09% from the previous two weeks, while the core index is expected to have increased 0.21%, according to the survey. Official data will be released on Thursday.
The Bank of Mexico, which has an inflation target of 3% plus or minus one percentage point, cut its benchmark interest rate by 50 basis points last month, its second consecutive reduction of that magnitude, and said it may consider similar cuts going forward if the inflation environment allows.
The bank’s next rate announcement is scheduled for May 15, and although economic growth does not fall under its mandate, analysts believe the weak outlook stemming from global trade tensions may add to the argument for continuing the monetary easing cycle.
The International Monetary Fund on Tuesday estimated a 0.3% contraction in Mexico’s Gross Domestic Product this year, a significant revision from its January projection of a 1.4% increase.
(Reporting by Noe Torres; Additional reporting by Gabriel Burin in Buenos Aires; Editing by Richard Chang)
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