The Bank of Mexico cut its growth forecast for Latin America's second-largest economy this year to 0.6%, from 1.2% previously, and said it now expects inflation to take longer to ease to its target of 3.0%.
The bank forecast average annual core inflation, which some analysts consider more reliable as it excludes volatile energy and food prices, of 3.3% for the fourth quarter this year. That is up from a previous estimate of 3%.
Banxico, as the central bank is known, also forecast annual headline inflation for the fourth quarter of 3.3%, versus a prior projection of 3%.
In its quarterly report, Banxico said the inflationary environment would likely permit it to continue cutting the benchmark interest rate.
Earlier this month, Banxico cut the key interest rate by 50 basis points, saying it could cut by a similar magnitude in the future as inflation cools and after the economy contracted slightly late last year.
