MEXICO CITY (Reuters)

Mexico's annual inflation is likely to continue moderating in early September, according to a Reuters poll of analysts. This raises expectations for a possible cut in the central bank's benchmark interest rate during its upcoming announcement this week.

The median estimate from 11 analysts suggests an overall consumer price index (CPI) drop to 4.73%, marking four consecutive fortnights of decline; however, this still exceeds the official target of 3%, plus or minus a percentage point.

The core inflation index, excluding volatile products for a clearer view of price trends, is expected to decrease to 3.97%, the lowest since February 2021.

In the first half of September, prices are estimated to have risen by 0.15% since the previous two weeks, with core prices increasing by 0.23%, according to the Reuters poll.

Earlier in August, the central bank cut its benchmark interest rate by 25 basis points amid a divided vote, suggesting that the inflationary landscape may permit further monetary easing considerations.

The Bank of Mexico is set to announce its next monetary policy decision on Thursday, shortly after the Federal Reserve began easing its monetary policy with a significant half-percentage-point rate cut, potentially enabling the Mexican central bank to reduce rates again.

Additionally, the National Statistics Institute (INEGI) will publish consumer price data for the first half of September on Tuesday.