Banxico expects cooling inflation to allow for more rate cuts by Reuters

MEXICO CITY (Reuters) – Bank of Mexico’s five-member governing board expects lower inflation could allow for further cuts in its benchmark interest rate, minutes from the bank’s September monetary policy decision showed on Thursday.

Banxico, as Mexico’s central bank is known, cut its key lending rate on Sept. 26 by 25 basis points to 10.50 percent after a four-to-five vote by its governing board .

The minutes showed that most board members agreed that Mexico’s inflation outlook had improved, with all members noting that core inflation in the No. 2 of Latin America continued to decline.

Most of the board warned, however, that inflationary pressures were still a challenge.

Mexico’s 12-month headline inflation hit 4.58 percent in September, down from August’s figure of 4.99 percent, fueling expectations that Banxico may continue to cut interest rates.

However, all board members stressed that services inflation continues to show persistence.