The Bank of Mexico could increase the size of cuts to its benchmark interest rate in future meetings as inflation eases in Latin America's second-largest economy, minutes from the central bank's December monetary policy meeting showed on Thursday.

Mexico’s annual inflation eased last month to the lowest level since February 2021, keeping in play a fifth straight interest rate cut at the central bank’s next policy meeting.

Mexico’s annual inflation rate dropped to a nearly four-year low of 4.21%, representing a notable decline of 0.34% from 4.55% in November. The inflation rate below market expectations remains quite astounding as they had predicted a rate of 4.

Mexico's headline inflation rate eased more than expected in December, fueling bets that the central bank will keep cutting its benchmark interest rate despite an uptick in the core consumer price index.