Mexico headline inflation likely down in first half of March: Reuters poll

MEXICO CITY (Reuters) - Mexico's annual inflation likely slowed in the first half of March, according to a Reuters poll, supporting bets that the central bank will lower its benchmark interest rate again next week by half a percentage point.

The median estimate from 10 participants forecast an annual rate of 3.76% for the general consumer price index in the first two weeks of the month, below the rate of 3.81% registered in the second half of February.

Core inflation, which strips out especially volatile food and energy prices, is estimated to decrease to 3.56%, its lowest level since May 2020.

"Given that inflation has stayed within the Bank of Mexico's target range over the last five fortnights, we continue to expect a 50 basis point (bp) cut at the March 27 meeting," the financial group Actinver said in an analysis note.

Poll participants expect prices to have risen by 0.22% compared to the prior two-week period, while the core index is expected to increase by 0.24%. The official data will be released on Monday.

The central bank, which has an inflation target range of 3%, plus or minus one percentage point, accelerated its pace of cuts last month, lowering its benchmark interest rate by 50 basis points to 9.5%.

The bank has stated that it will consider similar adjustments in the future if inflation keeps cooling and allows for it.

Adding pressure on the monetary authority, the economy contracted by 0.6% at the end of 2024 and analysts do not rule out a new setback in the current first quarter due to looming trade tensions with the United States.

(Reporting by Noe Torres; additional reporting by Gabriel Burin in Buenos Aires, Editing by William Maclean)