Inflation Slows in Brazil, Mexico June Amid Core Rate Rise

Brazil's monthly inflation is expected to have slowed for a fourth consecutive month in June, mainly due to lower gasoline prices, though annual inflation remains high at 5.32%, well above the central bank's target, prompting officials to maintain high interest rates. Meanwhile, Mexico's annual inflation rate eased to 4.32% in June from 4.42% in May, thanks to declines in energy and agricultural prices, but core inflation—which strips out volatile items—rose to 4.24%, its highest since April of the previous year. This divergence between headline and core inflation in Mexico is leading the central bank to consider slowing the pace of interest rate cuts, as inflation remains above its target of 3% plus or minus one percentage point. Markets and analysts expect the Bank of Mexico to shift from 50 basis point cuts to smaller, 25 basis point reductions in upcoming meetings. Both Brazil and Mexico are grappling with stubbornly high inflation despite some recent easing, complicating monetary policy decisions.