Mexico’s inflation rate decreases in Feb

Mexico‘s inflation rate decreased in February for the first time since October, fueling expectations of upcoming interest rate cuts by central bankers.

Consumer prices increased by 4.4 per cent year-on-year in February, down from 4.88% in January, as reported by the national statistics institute. Core inflation, excluding volatile items, also slowed to 4.64 per cent.

Central bankers, led by Victoria Rodriguez, are monitoring underlying price trends closely to determine if monetary policy can be relaxed starting from the March 21 decision. Analysts predict a quarter-point rate cut at that meeting, followed by further reductions throughout the year.

Analysts anticipate a significant decline in headline inflation, with core measures continuing to decrease gradually. Policymakers are emphasising improvements in the inflation outlook, particularly in agriculture products and services inflation.

Mexico’s central bank, known as Banxico, has maintained steady borrowing costs post-pandemic, in contrast to easing cycles in Brazil, Chile, and Colombia. The Federal Reserve’s unchanged stance provides additional reason for caution among Mexican central bankers.