Mexican Prices Seen Sticking To Downward Trend, Likely Eased In July

• Rising consumer prices in Mexico likely slowed in July, which would mark the sixth straight monthly inflation rate drop, a Reuters poll showed on Monday, August 7. However, bets indicate that the central bank's key borrowing rate will likely remain at its record high.
• The median forecast of 11 analysts surveyed was for annual inflation to ease to 4.78% in July, which would be the lowest rate of rising prices since March 2021, after it rose to a record 8.7% last year. Meanwhile, annual core inflation, which strips out some volatile food and energy prices, is forecast to slow to 6.67% year-on-year, which would mark its lowest level since February 2022. 
• The Bank of Mexico (Banxico), which has an inflation target of 3% plus or minus one percentage point, in late June, voted to keep its benchmark interest rate steady at a historic high of 11.25%, suggesting it might need to keep it there for an extended time as it seeks to bring inflation down to its target.
• In May, Banxico ended a rate hiking cycle launched in 2021, which raised its benchmark rate by a total of 725 basis points. Banxico will announce its next rates decision on Thursday.
• Last month, consumer prices likely rose 0.48% compared to June's rate, while core inflation in July is forecast up by 0.41%, according to the poll.

(Source: Reuters)