Mexico's Inflation Rate Drops

(Reuters) – Mexico's 12-month headline inflation rate fell again in September, easing from the previous month and raising expectations for further cuts in the central bank's benchmark interest rate.

Annual headline inflation in Latin America's second-largest economy reached 4.58% last month, according to data from the statistics agency INEGI released on Wednesday. This figure was below the expected 4.62% from a Reuters poll and down from 4.99% in August.

The closely watched core consumer price index, which excludes volatile energy and food prices, continued to slow, hitting 3.91% for the 12 months through September, down from 4.00% in August.

The central bank cut its benchmark interest rate last month for the third time this year, reducing it to 10.50%. The bank's board has indicated that cooling prices may allow for continued reductions in borrowing costs.

Mexico's central bank has two more monetary policy decisions scheduled for this year. Polls indicate the benchmark interest rate could end 2024 at 10% and dip to 8% in 2025.

> "The September print, alongside the weakness in the economy and the U.S. Fed's easing of monetary policy, supports the idea that Mexico's central bank will cut rates," said Jason Tuvey, deputy chief emerging markets economist at Capital Economics.
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> He noted that by December, the policy rate is expected to reach 10% after a cut of 25 basis points at each remaining meeting.