Mexico’s August CPI came in below expectations at 3.26% year on year, versus the forecast of 3.30%, but core CPI remained elevated at 3.88%. The government’s budget proposal assumes year-end inflation of 3.5% and inflation of 3.0% at the end of 2027, and it is reported to be accepting the central bank’s cautious stance on rate cuts.
Mexico’s August consumer price index (CPI) rose 3.26% from the same month a year earlier, with the monthly increase remaining subdued, while core CPI remained elevated at 3.88%. Market attention is focused on whether persistently high inflation will affect the timing of the start of policy rate cuts. The government’s budget proposal assumes inflation of 3.5% at year-end and 3.0% at the end of 2027, which is understood to be consistent with the central bank’s outlook.
Against this backdrop, market expectations that the central bank will keep the current policy rate of 6.50% unchanged at least through the first half of next year remain widespread. As the government’s outlook is aligned with the central bank’s stance, cautious views on an early resumption of rate cuts are expected to remain dominant. In the FX market, attention will continue to be paid to movements in MXN/JPY.