UPDATE 1-Bank of Mexico's Heath calls for interest rate caution on inflation concerns

(Adds context throughout and quote) MEXICO CITY, Oct 15 (Reuters) - Mexico's central bank should take a more cautious monetary policy stance given that the country's core inflation rate is still above target, deputy governor Jonathan Heath said in an interview published on Wednesday.

(Adds context throughout and quote) MEXICO CITY, Oct 15 (Reuters) -

Mexico's central bank should take a more cautious monetary policy stance given that the country's core inflation rate is still above target, deputy governor Jonathan Heath said in an interview published on Wednesday. While headline inflation sits within the Bank of Mexico's target of 3%, plus or minus a percentage point, the annual core rate, a closely watched indicator of price trends that strips out highly volatile prices, ticked up to 4.28% in September.

In a podcast published by Grupo Financiero Banorte, Heath noted that continued increases in labor costs and international food prices were hindering rapid convergence toward the 3% inflation target. "We shouldn't rush into lowering the rate so aggressively," Heath said.

Heath was the sole dissenting vote to hold borrowing costs when the central bank, known as Banxico, lowered borrowing costs last month for the 10th consecutive time, with its key interest rate reaching its lowest level since 2022 at 7.5%.

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