Banxico Monetary Policy Statement - 2023-05-18
Central bank: banxico | Type: decision | Date: 2023-05-18

May 18, 2023
This document is provided for the reader’s convenience only. The translation from the official Spanish version was made by Banco de México’s
staff. Discrepancies may possibly arise between the original document in Spanish and its English translation. For this reason, the original Monetary
Policy Statement in Spanish remains the only official document.
Banco de México’s Governing Board decided to leave the target for the overnight interbank
interest rate unchanged at 11.25%.
Headline inflation continued decreasing in most economies. Nevertheless, it still remains at high levels.
The core component has shown a resistance to decline. International financial markets have stabilized
after the turbulence generated by the banking industry’s events in previous months , although risks
persist. Several central banks have stopped raising their reference rates . World growth prospects for
2023 continue implying a deceleration. Among key global risks are persistent inflationary pressures, the
intensification of geopolitical turmoil, tighter financial conditions, and the challenges to financial stability.
Since the previous monetary policy decision, short-term interest rates in Mexico increased while medium-
and long-term ones decreased. The Mexican peso appreciated. Economic activity has remained resilient
in a complex external environment and, during the first quarter of 2023, it registered an increase in its
rate of expansion. The labor market remains strong.
Since the last monetary policy meeting, annual headline inflation continued decreasing. Moreover, in its
last readings, core inflation decreased more markedly than in previous months. Both of them, however,
remain at high levels, registering 6.25% and 7.67%, respectively, in April. Inflation expectations for 2023
decreased while those for longer terms remained relatively stable at levels above target.
Forecasts for headline inflation were revised marginally downwards for some quarters, while those for
core inflation remained practically unchanged. Inflation is still projected to converge to the 3% target in
the fourth quarter of 2024 (see table). These projections are subject to risks. On the upside: i) persistence
of core inflation at high levels; ii) foreign exchange depreciation due to volatility in international financial
markets; iii) greater cost -related pressures, and iv) pressures on energy prices or on agricultural and
livestock product prices. On the downside: i) a greater-than-anticipated slowdown of the world economy;
ii) a lower pass -through effect from some cost -related pressures; iii) a better functioning of production
and distribution chains; and, iv) a larger-than-anticipated effect from the Federal Government’s measures
to fight elevated prices. The balance of risks for the trajector y of inflation within the forecast horizon
remains biased to the upside.
The Governing Board evaluated the magnitude and diversity of the inflationary shocks and their
determinants, along with the evolution of medium - and long-term inflation expectations and the price
formation process. It considered that the economy has started to undergo a disinflationary process given
that many pressures have eased. Nevertheless, it deemed that these pressures continue having an
incidence on inflation, as it remains high and the inflationary outlook is still very complex. Based on the
above, and considering the monetary policy stance already attained in this hiking cycle, with the presence
of all its members, the Board decided unanimously to leave the target for the overnight interbank interest
rate unchanged at 11.25% . With this decision, the monetary policy stance remains in the trajectory
required for inflation to converge to its 3% target within the forecast horizon.
The Board will thoroughly monitor inflationary pressures as well as all factors that have an incidence on
the foreseen path for inflation and its expectations . It estimates that the inflationary outlook will be
complicated and uncertain throughout the entire forecast horizon, with upward risks. Thus, in order to
achieve an orderly and sustained convergence of headline inflation to the 3% target, it considers that it
will be necessary to maintain the reference rate at its current level for an extended period. The central
bank reaffirms its commitment with its primary mandate and the need to continue its efforts to consolidate
an environment of low and stable inflation.
1/ Forecast starting May 2023.
2/ Forecast starting March 2023. See monetary policy statement of March 30, 2023.
3/ See methodological note on the seasonal adjustment process.
Source: INEGI for observed annual variation figures and Banco de México for seasonally adjusted figures and forecasts.
Note: Shaded areas correspond to observed figures.
I II III IV I II III IV I II III IV I
Headline (CPI)
Current (05/18/2023)1/ 7.3 7.8 8.5 8.0 7.5 6.0 5.2 4.7 4.2 3.7 3.4 3.1 3.1
Previous (03/30/2023)2/ 7.3 7.8 8.5 8.0 7.5 6.3 5.3 4.8 4.2 3.7 3.4 3.1 3.1
Current (05/18/2023)1/ 6.5 7.3 8.0 8.4 8.3 7.4 6.2 5.0 4.1 3.5 3.2 3.1 3.1
Previous (03/30/2023)2/ 6.5 7.3 8.0 8.4 8.3 7.5 6.2 5.0 4.1 3.5 3.2 3.1 3.1
Annualized seasonally adjusted quartely variation in percent 3/
Current - Headline 1/ 7.4 10.3 8.2 6.1 5.4 4.3 4.9 4.2 3.3 2.6 3.2 3.2 3.4
Current - Core 1/ 7.7 8.7 8.9 8.5 7.0 5.3 4.2 3.6 3.4 3.0 2.8 3.1 3.3
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2022 2023 2024