June 7 (Reuters) - Mexico's 12-month headline inflation

index rose less than expected and core inflation eased in May,

official data showed on Friday, raising questions about the

central bank's next monetary policy move.

The Bank of Mexico (Banxico) unanimously held its benchmark

interest rate steady at 11% last month as inflation remains

above its target range, but some believe the latest data may

open room for a small rate cut later in June.

Annual inflation in Latin America's second-largest economy

hit 4.69% last month, INEGI said, up from 4.65% in April but

below the 4.82% forecast by economists polled by Reuters.

Core inflation, which strips out some volatile energy and

food prices and is considered a better measure of price

trajectories, slid to settle at 4.21% from 4.37% the month

before, also below the expected 4.29%.

"The core inflation picture continues to improve, pushing

inflation expectations down, which will allow Banxico to cut the

main rate by 25 basis points this month," said Andres Abadia,

Pantheon Macroeconomics' chief Latin America economist.

During the month, core inflation stood at 0.17%, while

headline inflation posted a 0.19% drop. Economists expected

0.25% and a 0.06% decrease, respectively.

Despite the better-than-expected inflation figures, the

12-month indexes remain above the central bank's target of 3%,

plus or minus 1 percentage point, which policymakers at the

central bank have committed to pursue.

Capital Economics' deputy chief emerging markets economist,

Jason Tuvey, said he expects the latest figures to do little to

quell the hawkishness on Banxico's board and concerns about the

persistence of price pressures.

"After pausing the easing cycle at its May meeting, it seems

increasingly likely that rates will be on hold again in June,"

Tuvey said, noting his forecast for rates to end this year at

10% is above consensus.

The May decision came after a March cut of 25 basis points,

the first rate reduction since the central bank embarked on a

tightening cycle in 2021.