Bank of Mexico Adjusts Economic Forecast and Inflation Targets

The Bank of Mexico has revised its growth forecast for the nation to 0.6% and predicts a longer timeline for reaching its inflation target of 3%. The bank anticipates higher core inflation and continues to adjust interest rates as the economy contracts.

The Bank of Mexico has announced a downward revision in its growth forecast for Latin America's second-largest economy, now pegging it at 0.6% from an earlier 1.2%. This adjustment reflects the bank's expectation that inflation will take longer to reach its 3% target.

Updated forecasts put average annual core inflation at 3.3% for the fourth quarter, a slight increase from a previous 3% estimate. Similarly, Banxico projects annual headline inflation at 3.3%. The figures suggest that inflationary pressures, although cooling, remain significant.

In its quarterly report, Banxico indicated that the inflationary climate could allow further reductions in the benchmark interest rate. Earlier this month, the bank cut the key rate by 50 basis points, with hints of more cuts if the economic conditions permit as inflation trends downward.

(With inputs from agencies.)