© Reuters. People sell corn grains at a public market in Ozumba de Alzate, State of Mexico, Mexico, May 24, 2022. REUTERS/Edgard Garrido/file photo

MEXICO CITY (Reuters) – Mexico’s headline inflation likely eased in the first half of July to its lowest level in more than two years, but still remained above the central bank’s target, a Reuters poll showed Friday, reinforcing bets the bank will hold its key rate longer.

The median forecast of 10 analysts see annual headline inflation at 4.77% in the first 15 days of the month, its lowest level since March 2021.

Core inflation, which strips out volatile food and energy products, is forecast to have slid to 6.73% year-on-year, marking the eleventh consecutive fortnight of slowdown.

Both still remain well above the central bank’s target of 3%, plus or minus 1 percentage point.

Last month, Mexico’s central bank board members made the unanimous decision to hold its benchmark interest rate at 11.25% for the second time, and warned that it will be necessary to keep it at that level for a prolonged period of time for inflation to converge to its target.

Banxico first paused its rate hikes in May after a nearly two-year hiking cycle that began in June 2021.

In the first half of July, consumer prices were forecast to have risen 0.27% compared with the previous two-week period, while the core index likely rose 0.22%.

Mexico’s statistics institute will release inflation data for the first half of July on Monday.

(Report by Noé Torres; Editing by Marguerita Choy)

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