Banxico Monetary Policy Statement - 2022-11-10
Central bank: banxico | Type: decision | Date: 2022-11-10

November 10, 2022
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 raise the target for the overnight interbank
interest rate by 75 basis points to 10.00%, effective November 11, 2022.
Available indicators anticipate a moderate expansion of world economic activity during the third quarter,
although the outlook for 2023 has continued to deteriorate. Global inflation remains high and risks to the
upside persist, although there are signs that pressures on primary goods and disruptions in supply chains
have started to mitigate. Financial conditions remained tight. A large number of central banks continued
raising their reference rates, some of them in a lesser-than-expected magnitude. These reference rates
are foreseen to remain at high levels for an extended period. In its latest monetary policy decision, the
Federal Reserve raised the target range for the federal funds rate by 75 basis points for a fourth
consecutive time and anticipated additional increases. Among key global risks are those associated with
the pandemic, the persistence of inflationary pressures, the intensification of geopolitical turmoil, and
tighter monetary and financial conditions.
The Mexican peso appreciated, thus showing greater resilience than other currencies. Short-term interest
rates increased while medium - and long -term ones registered limited adjustments . The Mexican
economy continued recovering during the third quarter. It exhibited a rate of expansion similar to that of
the previous two quarters, higher than expected, reaching a level close to that registered prior to the
onset of the pandemic. Slack conditions have continued decreasing.
In October, headline inflation declined slightly to 8.41% , due to a reduction in its non-core component.
Core inflation, however, continued trending upwards, reaching 8.42%. The accumulated pressures
associated with both the pandemic and the military conflict have continued to affect headline and core
inflation. Their expectations for 2022, 2023, and for the medium term rose again, while those for the long
term remained stable, although above the target.
For the short term, f orecasts for headline inflation were revised marginally downwards, while those for
core inflation were revised slightly upwards. Inflation is still projected to converge to the 3% target in the
third quarter of 2024 (see Table). These projections are subject to risks. On the upside: i) persistence of
core inflation at high levels; ii) external inflationary pressures associated with the pandemic; iii) greater
pressures on agricultural and livestock product prices and on energy prices due to the ongoing
geopolitical conflict; iv) exchange rate depreciation; and v) cost-related pressures. On the downside: i) a
greater-than-anticipated slowdown of the world economy; ii) a decline in the intensity of the geopolitical
conflict; iii) a better functioning of supply chains; iv) a lower pass-through effect from some cost-related
pressures; and v) a larger -than-anticipated effect from the Federal Government’s measures t o fight
elevated prices. Although some shocks show signs of subsiding, the balance of risks that might have an
incidence on the trajectory of inflation within the forecast horizon remains biased to the upside.
The Governing Board evaluated the magnitude and diversity of the shocks that have affected inflation
and its determinants, along with the evolution of medium- and long-term inflation expectations and the
price formation process. It also considered the increasing challenges for monetary policy stemming from
the ongoing tightening of global financial conditions, the environment of significant uncertainty, the
inflationary pressures accumulated as a result of the pandemic and the geopolitical conflict, the possibility
of greater effects on inflation, and the monetary policy stance already attained in this hiking cycle. Based
on these considerations, the Board decided by majority to raise the target for the overnight interbank
interest rate by 75 basis points to 10.00%. With this action, the monetary policy stance adjusts to 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. This, in order to set a policy rate that is consistent at
all times, with both the orderly and sustained convergence of headline i nflation to the 3% target within
the time frame in which monetary policy operates as well as with an adequate adjustment of the economy
and financial markets . In its next meetings, the Board will assess the magnitude of the upward
adjustments to the reference rate based on the prevailing conditions.
Voting in favor of the decision were Victoria Rodríguez, Galia Borja, Irene Espinosa, and Jonathan Heath.
Gerardo Esquivel voted in favor of raising the target for the overnight interbank interest rate by 50 basis
points to 9.75%.
1/ Forecast starting November 2022.
2/ Forecast starting September 2022. See monetary policy statement of September 29, 2022.
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.
III IV I II III IV I II III IV I II III
Headline (CPI)
Current (11/10/2022) 1/ 5.8 7.0 7.3 7.8 8.5 8.3 7.6 5.8 4.7 4.1 3.8 3.4 3.1
Previous (09/29/2022) 2/ 5.8 7.0 7.3 7.8 8.6 8.6 7.9 6.0 4.8 4.0 3.7 3.4 3.1
Current (11/10/2022) 1/ 4.8 5.6 6.5 7.3 8.0 8.3 7.5 6.4 5.2 4.1 3.6 3.2 3.0
Previous (09/29/2022) 2/ 4.8 5.6 6.5 7.3 8.0 8.2 7.3 6.2 5.0 4.1 3.6 3.2 3.0
Annualized seasonally adjusted quartely variation in percent3/
Current - Headline 1/ 5.8 7.5 7.3 10.6 8.7 6.6 4.6 3.4 4.1 4.1 3.3 2.2 2.9
Current - Core1/ 5.9 6.5 8.3 8.7 8.5 7.8 5.1 4.2 3.7 3.2 3.2 2.9 2.6
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2021 2022 2023 2024