This afternoon, European time, the Mexican inflation figures for September will be released, Commerzbank’s FX analyst Michael Pfister notes.

The core rate is likely to be more decisive

“The consensus is for a fairly significant decline in the headline rate, and only a slight decline in the core rate (both year-on-year). To put this into perspective, it should be noted that we will not see particularly high base effects, i.e. the expected decline is more likely due to lower (new) inflationary pressures in September.”

“Looking at this new inflationary pressure, it is quite understandable that the headline rate is falling more than the core rate, given the decline in oil prices in September. With oil prices already on the rise again amid geopolitical concerns, Banxico is likely to see through this decline in its next decision. The core rate is likely to be more decisive.”

“And the slight decline expected here should probably only be seen as a first step in the right direction - and thus not allow a fundamental reassessment of Banxico's approach. Rather, it should continue to lay the groundwork for further rate cuts, but there is no need for major reductions. Or to put it another way: even after these inflation figures, nothing much should change at Banxico.”