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Pantheon See Favourable Base Effects Allowing for Banxico Rate Cuts in H2

MEXICO
  • A small increase in the core component was offset partially by falling pressures in the non-core component.
  • A 0.8% fall in energy tariffs was the main drag, reflecting falling LP gas prices, as well as a 3.4% drop in domestic gas tariffs. The underlying trend in non-core inflation is still falling rapidly.
  • Favourable base effects, and the MXN rebound will help to bring inflation down over the second half of the year, allowing Banxico to cut rates, if the Fed moves to the sidelines in Q4.

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