MEXICO CITY (Reuters) -The Bank of Mexico raised its forecast for economic growth this year, predicting expansion of 0.6% this year compared to a previous estimate of 0.1%, the central bank said in its quarterly report on Friday.
“The Mexican economy grew more than expected,” Central Bank Governor Victoria Rodriguez said, noting the weak performance in the first quarter of the year and the contraction in fourth quarter of 2024.
The central bank also raised its forecast for economic growth in 2026 to 1.1% from a prior estimate of 0.9%.
But Banxico, as the central bank is known, also increased its prognosis for inflation.
The bank now expects annual headline inflation in the fourth quarter to reach 3.7%, versus a prior forecast of 3.3%. Still, the bank maintained its estimate that headline inflation will coverage to its 3% target in the third quarter of 2026.
Annual core inflation, which excludes some volatile goods and is considered a more reliable indicator, was revised upwards to 3.7% for the fourth quarter of the year, compared to bank’s earlier forecast of 3.4%.
Earlier this month, Banxico in a divided vote cut its benchmark interest rate to 7.75%, bringing the rate to its lowest level in three years.
(Reporting by Sarah Morland, Emily Green, Ana Isabel Martinez and Adriana Barrera; Editing by Daina Beth Solomon)
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