Bank Of Mexico's Health Calls for Interest Rate Caution on Inflation Concerns

• The Bank of Mexico should be more cautious in cutting interest rates, given the current scenario of sticky core inflation and headline inflation still above target, deputy governor Jonathan Heath said.
• The central bank has cut borrowing costs for ten straight meetings, most recently delivering a quarter percentage cut last month that Heath opposed. While the annual headline inflation sits within the Bank of Mexico's target range of 3%, plus or minus a percentage point, the goal is to get it to 3%, Heath said in a podcast by Grupo Financiero Banorte.
• Heath noted that continued increases in labour costs and international food prices were hindering rapid convergence toward the 3% inflation target. Core inflation, meanwhile, a closely watched indicator of price trends that strips out highly volatile prices like food and energy, ticked up to 4.28% in September - "showing no sign that it wants to go down," Heath said.
• The annual headline rate sped up in September to 3.76%, according to official data; however, the central bank estimates the rate will hit 3% in the third quarter of next year.

(Source: Reuters)