Although inflation in Mexico slowed for the sixth consecutive month in July to 4.79%, from 8.15% a year earlier, a rate cut is unlikely as risks remain.
Despite the downward trend, the central bank maintained the reference rate at 11.25% after the two previous meetings, due to an uncertain inflation scenario. The Board of Directors of the Monetary Authority meets again on August 10.
Gabriela Seiler, Director of Economic Analysis at Grupo Financiero Base, tweeted that the rate would remain unchanged because “despite the fact that inflation continues to show a downward trajectory in line with expectations, until the end of the year there is an expectation of an annual inflation of 4.6%”
The issuing institute has a target of 3% with a 1 percentage point tolerance.
And although the consumer price index for July reached its lowest level since March 2021, the core component, which eliminates the most volatile prices, remains high.
“Core inflation, which sets the course for general inflation in the medium and long term, reached 6.64% annually, declining for the sixth month in a row and reaching its lowest level since February in the region, Uruguay, Chile, the United States and Brazil have begun to ease their restrictive monetary policies 2022,” Seiler said.
However, the financial analyst explained that “at the monthly rate, core inflation was 0.39%, which historically still represents a high level for the month of July, as the average inflation per month in the past 10 years was 0.29%.”
In the region, Uruguay, Chile and Brazil have begun to ease their restrictive monetary policies.
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