Mexico's Annual Inflation Hits Lowest Level in Over Five Years

• Mexico's annual inflation rate fell in June for the third consecutive month, to its lowest level since December 2020, official data showed on Thursday. Annual prices in Latin America's second-largest economy slowed more than ​expected and settled into the central bank's target range, easing pressures to hike rates.
• Consumer ​prices rose 3.37% in the year through to June, the national statistics ⁠agency said, down from a 3.94% increase the prior month. In a ​Reuters poll, economists had expected a 3.52% increase.
• The larger-than-expected decline "will be welcomed by Banco de Mexico (Banxico) and means ​that interest rates will remain on hold in the near term," Capital Economics analyst Kimberley Sperrfechter said in a note. The annual core rate stood at 4.03%, slightly above the Mexican central bank target range ​of 3%, plus or minus a percentage point.
• Banxico held its benchmark interest rate at 6.5% late in June, in a unanimous decision, amid inflation ‌concerns ⁠linked to foreign trade policies and geopolitical conflicts. The central bank is expected to publish the minutes of that meeting later Thursday. The authorities will likely keep the rate unchanged until they see more convincing evidence that core inflation is ​converging toward the ​target," Pantheon Macroeconomics' ⁠analysts said.
• The market expects the benchmark rate to remain unchanged for the rest of this year ​and in 2027. However, opinions are divided on whether the ​next move ⁠will be a cut or a hike.

(Source: Reuters)