Mexico Inflation Accelerates More Than Expected in Early June

Analysts surveyed by Citibanamex initially forecast that the central bank would cut rates after a pause in May left the key rate at 10.75%. Now, they’re predicting that the bank will wait until September to decide whether to cut as consumer prices continue to rise above the 3% target, and inflation expectations remain above that level too, affected both by summer spending and the drought that has damaged agricultural production.

Additionally, the central bank must now also consider the upside risks to inflation from the peso’s depreciation, after a post-June 2 election rout sent the currency tumbling to a 15-month low.

Governor Victoria Rodriguez had said Banco de Mexico, as the bank is known, has the tools to intervene if necessary, but added that the bank does not target an optimum rate for the peso.

Source: YAHOO