Mexico Inflation Edges Above Forecast Ahead of Rate Meeting

7hf{mlhugygjm]58(56l]t7x_media_dl_1.png National statistics agency, cent

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(Bloomberg) —

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Mexico’s inflation accelerated more than expected in April while remaining within the central bank’s target range, likely keeping a half-point interest rate cut next week on the table.

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Annual inflation hit 3.93%, above the 3.9% median estimate of economists surveyed by Bloomberg and up from March’s 3.8% print. The core reading, which excludes volatile items such as food and fuel, increased to 3.93% from 3.64% a month earlier. 

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The central bank, known as Banxico, targets inflation at 3%, plus or minus 1 percentage point. It has been cutting interest rates and its next decision is scheduled for May 15, with analysts in a Citi survey published Tuesday expecting another half-point cut.

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Carlos Capistran, chief economist for Canada and Mexico at Bank of America Securities, wrote in a research note that a half-point cut next week is the most likely scenario after Thursday’s data release, but the uptrend in core inflation may make “Banxico modify its forward guidance to open the door to slowing down the pace.” 

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Mexico narrowly dodged a technical recession in the first quarter of this year, with gross domestic product growing 0.2% in the first three months of 2025 from the fourth quarter of 2024, driven by a surge in the agricultural sector that offset weakness in the services and industrial sectors. 

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Deputy Governor Jonathan Heath said on Wednesday that the current economic scenario makes it “highly likely” that Banxico will continue to lower borrowing costs.

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Donald Trump’s on-again, off-again tariff policies have raised concerns about whether investors will avoid Mexico this year. Some firms are plunging ahead with investments in everything from shipping routes to TV shows, but others are questioning what Mexico’s exports to the US will look like next year.

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In the Citi research unit’s survey, analysts forecast that Mexico inflation will end both 2025 and 2026 at 3.8%. They also predicted GDP growth of 0.1% this year and 1.5% next year.

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—With assistance from Rafael Gayol.

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(Updates with comments from Banixico central banker and analysis beginning in fourth paragraph.)

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