MEXICO CITY (Reuters)

Mexico’s annual inflation likely slowed in the first half of April, according to a Reuters poll on Tuesday. This supports the likelihood of a half percentage point cut in the central bank’s key rate in May.

The median estimate from 10 participants indicates an annual headline inflation rate of 3.89% for the first half of the month, a decrease from 3.93% in late March.

Annual core inflation, which is a more stable measure as it excludes volatile products like food and energy, is projected at 3.78%.

Prices are expected to have risen 0.09% over the previous two weeks, while the core index is anticipated to increase by 0.21%, based on 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, previously reduced its benchmark interest rate by 50 basis points last month. It indicated the possibility of further cuts if the inflation situation allows.

The next rate announcement from the bank is scheduled for May 15. Economic growth is not under the bank’s direct mandate, but analysts suggest that the weak outlook due to global trade tensions could justify ongoing monetary easing.

The International Monetary Fund (IMF) projected a 0.3% contraction in Mexico’s Gross Domestic Product (GDP) for this year, a significant change from its January forecast of a 1.4% growth.