Mexico's annual inflation eases further, fueling rate-cut bets

(Reuters) -Mexico's 12-month headline inflation rate fell again in September, after easing in the previous month, raising expectations that the central bank will continue to cut its benchmark interest rate.

Annual headline inflation in Latin America's second-largest economy hit 4.58% last month, data from statistics agency INEGI showed on Wednesday, below the 4.62% expected in a Reuters poll and down from the August figure of 4.99%.

The closely watched core consumer price index, considered a more reliable measure of price trends as it excludes volatile energy and food prices, continued to slow, hitting 3.91% in the 12 months through September, down from 4.00% in August.

The central bank cut its benchmark interest rate last month for the third time this year, bringing it down to 10.50%. The bank's board has noted that cooling prices would likely mean it could keep lowering borrowing costs.

Mexico's central bank has two more monetary policy decisions scheduled later this year, with polls showing the benchmark interest rate might end 2024 at 10% and dip to 8% in 2025.

"The September print, alongside the weakness in the economy and the fact that the U.S. Fed is now easing monetary policy too, supports the idea that Mexico's central bank will cut rates," said Jason Tuvey, deputy chief emerging markets economist at Capital Economics.

He added that by December the policy rate would be at 10% after a cut of 25 basis points at each remaining meeting.

(Reporting by Ricardo Figueroa and Natalia Siniawski; Editing by Gabriel Araujo and Mark Porter)

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