Banxico Monetary Policy Statement - 2023-08-10
Central bank: banxico | Type: decision | Date: 2023-08-10

August 10, 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 maintain the target for the overnight interbank
interest rate at 11.25%.
Headline inflation continued decreasing in most economies. Nevertheless, it remains at high levels. The
core component has shown a resistance to decline. Central banks of the major advanced economies,
such as the US Federal Reserve and the European Central Bank, raised their reference rates, underlining
that future rate adjustments would be highly dependent on incoming data. World growth prospects for
2023 continue implying a deceleration, although slightly less intense than previously anticipated. Among
key global risks are persistence of inflationary pressures, the worsening of geopolitical turmoil, tighter
financial conditions, and, to a lesser extent, the challenges to financial stability.
In Mexico, since the previous monetary policy decision, government bond yields had been registering
limited adjustments for all terms and the exchange rate had been appreciating. However, in the last days,
longer-term bond yields and the exchange rate increased slightly due to greater risk aversion worldwide.
Economic activity has shown resilience and registered higher-than-anticipated growth. The labor market
remains strong. The balance of risks to growth is equilibrated.
Since the last monetary policy meeting, annual headline and core inflation continued decreasing.
However, they are still high, as they registered 4.79% and 6.64%, respectively, in July. Non-core inflation
remained at historical lows , reaching an atypical level of -0.67% during the same period . Inflation
expectations for 2023 decreased. Longer-term ones remained relatively stable at levels above target.
Forecasts for headline inflation remained practically unchanged. Those for core inflation were adjusted
marginally upwards for the short term. 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) pressu res 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) that the exchange rate appreciation contributes
more than anticipated to mitigate some pressures on inflation; and, iv) a larger-than-anticipated effect
from the Federal Government’s measures to fight elevated prices. The balance of risks for the trajectory
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 disinflationary process is underway given that diverse pressures
have eased. Nevertheless, it deemed that these continue having an incidence on inflation, a nd thus it
remains high. Also, that the inflationary outlook is still very complex. Based on the above, and considering
the monetary policy stance already attained, with the presence of all its members , the Board decided
unanimously to maintain the target for the overnight interbank interest rate 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 August 2023.
2/ Forecast starting June 2023. See monetary policy statement of June 22, 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.
II III IV I II III IV I II III IV I II
Headline (CPI)
Current (08/10/2023) 1/ 7.8 8.5 8.0 7.5 5.7 4.7 4.6 4.1 3.7 3.4 3.1 3.1 3.1
Previous (06/22/2023) 2/ 7.8 8.5 8.0 7.5 5.7 5.0 4.6 4.1 3.7 3.4 3.1 3.1 3.1
Current (08/10/2023) 1/ 7.3 8.0 8.4 8.3 7.3 6.2 5.1 4.2 3.6 3.2 3.1 3.1 3.1
Previous (06/22/2023) 2/ 7.3 8.0 8.4 8.3 7.3 6.2 5.0 4.1 3.5 3.2 3.1 3.1 3.1
Annualized seasonally adjusted quarterly variation in percent3/
Current - Headline 1/ 10.8 8.7 5.5 4.9 3.9 4.4 4.9 3.1 2.7 3.2 3.5 3.1 2.8
Current - Core1/ 8.8 9.0 8.3 6.9 5.1 4.5 4.0 3.2 2.8 2.9 3.3 3.2 2.8
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2022 2023 2024 2025