UPDATE 2-Mexico inflation cools in early Sept, more room for rate cut
MEXICO CITY, Sept 24 (Reuters) - Mexico's annual inflation rate eased in the first half of September to its slowest pace in eight months, giving policymakers more room to again cut interest rates to counter an economic slowdown. Inflation in the 12 months to mid-September slowed to 3.46 percent from 3.54 percent in the year through mid-August, just above the 3.42 percent rate expected in a Reuters poll, the country's national statistics agency said on Tuesday. The data marked the third mid-month reading in a row below the central bank's 4 percent ceiling. A spike in some fresh food prices pushed inflation above that level for four months running earlier this year. It was the slowest pace for a mid-month reading since January. Tame inflation and weak growth prompted Mexico's central bank to unexpectedly cut its benchmark interest rate to 3.75 percent earlier this month, after the economy shrank in the second quarter for the first time in four years.
Alfredo Coutino, Moody's Analytics director for Latin America, said the country could go into recession in the third quarter after some of the worst storm damage in decades flooded crop lands and killed at least 123 people. Growth risks boosted bets that the Banco de Mexico will cut rates again, with a poll by Banamex last week showing 14 out of 17 analysts see another 25 basis point cut in late October. The U.S. Federal Reserve's decision to delay tapering its economic stimulus program, which has supported investor appetite for risky assets, has also given the central bank more leeway to lower interest rates. Consumer prices rose 0.34 percent in the first half of September, above expectations for a 0.29 percent rise and up from a 0.26 percent increase in early August. Core consumer prices, which strip out some volatile food and energy prices, climbed 0.30 percent, above forecasts for a rise of 0.17 percent and up from a 0.1 percent advance in the first half of August.