(Bloomberg) -- Mexico’s headline inflation eased much more than expected earlier this month, reinforcing bets that central bankers in Latin America’s second-largest economy could soon join the region’s wave of interest rate cuts.

Consumer prices rose 4.45% in the first half of February compared to the same period a year prior, down from 4.87% in late January, the national statistics institute reported Thursday. The reading was below all forecasts in a Bloomberg survey that had a 4.7% median estimate.

Core inflation, which excludes volatile items such as fuel and food, slowed to 4.63% compared to a year ago, below economists’ 4.67% median estimate. Central bankers led by Victoria Rodriguez are closely following underlying price prints to get a better idea of overall cost-of-living pressures. 

Read More: Mexico Holds Record Rate After Prices Accelerated Last Month

Banxico, as Mexico’s monetary authority is known, has until now held rates steady as the region’s other major inflation-targeting central banks ease policy. Board members have refrained from clear guidance on the start to borrowing cost cuts amid price drivers including consumer demand and adverse weather. While core measures have eased, they remain above the 3% inflation target. 

Read More: Latin America Inflation Progress Tempered by Food Price Pressure

Fruits and vegetables fell 7.2% and were the biggest drivers of the better-than-expected reading. Core measures eased due to lower services costs. “This reading takes away a huge weight from central bankers, who could begin cutting rates next month,” said Andres Abadia, Chief Latin America Economist at Pantheon Macroeconomics. 

Governor Rodriguez has said she is willing to consider rate cuts, and other voting members have underscored they should be gradual. At the last policy meeting, the board signaled its decisions would depend “on available information,” saying lingering challenges justify restrictive borrowing costs. 

Banxico rate cuts could break a long pattern of following the Federal Reserve, which has signaled it’s too early to ease its own policy. “The rate curve should adjust to the fact that Mexico will begin relaxing monetary policy ahead of the US,” said Gabriel Casillas chief Latin America economist for Barclays Plc. 

Analysts see annual inflation at 4.20% in December and 3.7% at the end of next year, according to the latest Citi survey published this week.

--With assistance from Maya Averbuch, Rafael Gayol and Giovanna Serafim.

(Updates with more details from release and economists comments starting in fifth paragraph)

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