Mexico's yearly inflation rate likely inched higher in April but stayed within the central bank's target range, according to a Reuters poll of analysts released on Monday.
The survey of 16 analysts showed an average forecast of 3.90% for April’s annual inflation, up from 3.80% in March.
The central bank aims for an inflation rate of 3%, with a tolerance margin of one percentage point above or below. This supports expectations that the bank will continue reducing its key interest rate.
Core inflation, which excludes particularly volatile items like food and energy and is viewed as a more reliable gauge of underlying price trends, likely picked up in April, rising to 3.92% from 3.64% in March.
On a monthly basis, consumer prices were forecast to have increased by 0.30%, while core prices likely rose by 0.47%, according to the poll.
In March, Mexico’s central bank, Banxico, lowered its benchmark interest rate by 50 basis points to 9%, citing an improved inflation outlook that could permit further rate cuts.
The central bank is set to announce its next monetary policy decision on 15th May.
Although promoting economic growth isn’t part of Banxico’s official mandate, analysts suggest that a weak economic outlook, partly due to global trade tensions, could motivate the central bank to keep easing monetary policy, Reuters reports.
Mexico narrowly avoided a technical recession by posting a surprise 0.2% GDP growth in the first quarter of the year, following a 0.6% contraction in the previous quarter.
The government projects economic growth of between 1.5% and 2.3% for this year, according to a draft budget from the finance ministry.
However, private sector analysts surveyed by the central bank late last month cut their growth forecast sharply to just 0.20%, down from 0.50%. They also slightly raised their year-end inflation estimate to 3.8%, up from a prior projection of 3.7%.
Mexico’s national statistics agency, INEGI, is scheduled to release the official inflation figures for April this Thursday.