MEXICO CITY (Reuters) - The majority of the Bank of Mexico’s five-member board said they expected core inflation, the stickiest part of consumer prices of late, to begin coming down, minutes of the central bank’s Sept. 26 monetary policy meeting showed on Thursday.
The bank cut its key interest rate by 25 basis points to 7.75% at that meeting with the vote of three board members, while two members wanted a 50 basis point cut.
It was the second meeting in a row that Banxico, as the bank is known, cut its benchmark rate.
“Regarding core inflation expectations, most members pointed out that it is anticipated to start decreasing as the indirect effects of the shocks on energy product prices fade,” the minutes said.
Reducing stubborn core inflation, which strips out some volatile food and energy prices, is a challenge for the central bank, Banxico Governor Alejandro Diaz de Leon told Reuters in August.
Headline inflation stood at 3.0% in the year through September and at 0.26% on the month, cooling for a fifth straight month, data published by the INEGI national statistics agency on Wednesday showed.
That brought the headline annual rate to its lowest monthly figure in three years and exactly in line with the central bank’s target rate.
The core index rose 0.30% during September. MXCPIX=ECI
Cooling inflation has fueled expectations for Banxico to enact more interest rate cuts.
“As to expectations regarding the path of the monetary policy target rate implied in the yield curve structure, these were adjusted downwards vis-a-vis the levels observed in the previous period,” the minutes said.
Reporting by Anthony Esposito; Editing by David Gregorio