Mexico's inflation meets expectations in April ahead of rate decision

May 8 (Reuters) - Mexico's annual inflation rate came in line with market expectations in April, official data showed on Thursday, accelerating from the previous month but still within the central bank's target range.

That should allow the Bank of Mexico to keep lowering borrowing costs in Latin America's second-largest economy, which faces a weakening trend amid mounting global trade uncertainties, analysts say.

Consumer prices in Mexico rose 3.93% in the year through April, according to national statistics agency INEGI, roughly in line with economists' forecasts in a Reuters poll and up from 3.8% the previous month.

Mexico's central bank, also known as Banxico, has an inflation target of 3%, plus or minus a percentage point.

In March it cut its interest rate by 50 basis points for the second consecutive time to 9%, the lowest since September 2022, and policymakers have signaled that further easing should come if inflation holds steady as expected.

The central bank's next decision is scheduled for May 15.

JPMorgan economist Gabriel Lozano said that Banxico is widely expected to keep the 50-basis-point easing pace, noting that although the impact of U.S. tariffs brings downside risks to growth, inflation has not substantially improved.

"The narrative and dovish bias in the March statement together with incoming information ever since, suggest, in our view, that the May statement will be similar," he said in a note to clients.

Although economic growth is not part of Banxico's mandate, analysts believe a weak outlook stemming from trade tensions triggered by U.S. President Donald Trump's sweeping tariffs adds to the argument for it to keep easing monetary policy.

In April alone, consumer prices in Mexico rose 0.33%, while the closely watched core index, which strips out some volatile food and energy prices, rose 0.49%. Both were in line with market forecasts.

The 12-month core index stood at 3.93%, up from 3.64% in March, with core inflation driving the overall index up.

Andres Abadia of Pantheon Macroeconomics said that the latest data represent a bad start to the quarter but that underlying pressures remain in check, forecasting another 50-basis-point rate cut in May if external conditions are stable.