MEXICO CITY (Reuters) – Mexico’s inflation likely slowed in February but still remained well above the official target, fueling expectations the central bank will raise its key rate again in its next monetary policy announcement at the end of March.

The median forecast of 17 analysts shows annual inflation at 7.69% in February, down from the 7.91% posted in January, but nevertheless far above the Bank of Mexico’s target of 3% plus or minus one percentage point.

Inflation has pushed the Bank of Mexico to increase its key lending rate by 700 basis points to 11.00% during the current hiking cycle, which began in June 2021.

Meanwhile, annual core inflation, considered a better gauge of the price trajectory since it excludes items of high volatility, was forecast to hit 8.35% in February, after reaching 8.45% in January.

In February alone, consumer prices are expected up 0.61% from the previous month, while the median projection for monthly core inflation was seen at 0.66%.,

Most of the Bank of Mexico’s board members consider its benchmark interest rate could be raised more moderately at the next monetary policy meeting, according to the minutes of their last meeting. The central bank raised rates 50 basis points in February.

Nonetheless, all five board members expressed concern that core inflation’s upward trend has been more persistent than expected.

Persistent inflation and expected further tightening by the U.S. Federal Reserve are dashing hopes that Latin American central banks will back off sky-high benchmark interest rates.

Mexico’s statistics institute will release inflation data for February on Thursday.

(Reporting by Noe Torres; Additional reporting by Gabriel Burin in Buenos Aires; Writing by Valentine Hilaire; Editing by Andrea Ricci)