Banxico Monetary Policy Statement - 2024-11-14
Central bank: banxico | Type: decision | Date: 2024-11-14

November 14, 2024
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 lower the target for the overnight interbank
interest rate by 25 basis points to 10.25%, effective November 15, 2024.
During the third quarter of 2024, world economic activity is expected to have grown at a rate similar to
that of the previous quarter, although with a heterogeneous performance across countries. In advanced
economies, headline inflation has continued declining and, in several cases, it has remained below their
central banks’ targets. In its latest monetary policy decision, the US Federal Reserve cut its reference
rate by 25 basis points. Significant episodes of volatility were observed in international financial markets.
Government interest rates increased and the US dollar appreciated. Among key global risks are the
possibility of policies that revert global economic integration, the intensification of geopolitical turmoil, the
protraction of inflationary pressures, and higher levels of volatility in financial markets.
Since the previous monetary policy decision, Mexico’s medium- and long-term government interest rates
increased. The Mexican peso depreciated markedly and registered volatility mainly in response to the
effects of the electoral process in the United States. Nevertheless, financial markets have exhibited a
relatively orderly behavior. During the third quarter of 2024, according to timely information, domestic
productive activity would have grown at a higher rate than in the previous three quarters , when it
remained practically stagnant. It is expected to exhibit a lack of dynamism in 2025. As for the labor
market, employment slowed down. The balance of risks to growth of economic activity remained biased
to the downside.
Annual headline inflation rebounded to 4.76% in October, due to the effects of supply shocks that have
affected the non- core component. Core inflation, which better reflects inflation’s trend, continued
decreasing and registered 3.80% in October. Inflation expectations for the end of 2024 were revised
downwards, while those for longer terms remained relatively stable at levels above target.
The forecast for headline inflation was revised upwards in the short term due to the supply shocks. Headline
inflation is still expected to converge to the target in the fourth quarter of 2025 (see table). These
projections are subject to risks. On the upside: i) persistence of core inflation; ii) greater foreign exchange
depreciation; iii) greater cost-related pressures; iv) climate-related impacts, and v) the intensification of
geopolitical conflicts. On the downside: i) lower-than-anticipated economic activity; ii) a lower pass -
through effect from some cost-related pressures, and iii) a lower -than-anticipated effect of the peso’s
depreciation on inflation. The balance of risks for the trajectory of inflation within the forecast horizon
remains biased to the upside. Nevertheless, the inflation outlook has been improving after the significant
shocks caused by the pandemic and the war in Ukraine. The behavior of core inflation reflects this
improvement.
The Governing Board assessed the behavior of inflation and its determinants, as well as of inflation
expectations. It considered the nature of the shocks that have affected the non-core component and the
projection that their effects on headline inflation will dissipate over the next quarters. It took into account
core inflation’s trajectory and the fact that it is anticipated to continue decreasing. It estimated that,
although the outlook for inflation still calls for a restrictive monetary policy stance, its evolution implies
that it is adequate to reduce the level of monetary restriction. Thus, with the presence of all its members,
the Board decided unanimously to lower the target for the overnight interbank interest rate by 25 basis
points to 10.25%.
Looking ahead, the Board expects that the inflationary environment will allow further reference rate
adjustments. It will consider the prospect s of global shocks continuing to fade and the effects of the
weakness in economic activity. It will take into account the incidence of the monetary policy stance that
has been maintained and that prevailing in the future on the evolution of inflation throughout the horizon
in which monetary policy operates. Actions will be implemented in such a way that the reference rate
remains consistent at all times with the trajectory needed to enable an orderly and sustained convergence
of headline inflation to the 3% target during the forecast 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 November 2024.
2/ Forecast starting September 2024. See monetary policy statement of September 26, 2024.
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.
IV I II III IV I II III IV I II III
Headline (CPI)
Current (11/14/2024) 1/ 4.4 4.6 4.8 5.0 4.7 3.9 3.4 3.1 3.0 3.0 3.0 3.0
Previous (09/26/2024) 2/ 4.4 4.6 4.8 5.1 4.3 3.7 3.3 3.1 3.0 3.0 3.0 3.0
Current (11/14/2024) 1/ 5.3 4.7 4.2 4.0 3.7 3.5 3.3 3.1 3.0 3.0 3.0 3.0
Previous (09/26/2024) 2/ 5.3 4.7 4.2 4.0 3.8 3.5 3.3 3.1 3.0 3.0 3.0 3.0
Annualized seasonally adjusted quarterly variation in percent3/
Current - Headline 1/ 5.3 5.3 4.2 5.3 3.5 2.8 2.5 3.7 3.1 2.8 2.6 3.4
Current - Core1/ 4.6 4.3 3.7 3.6 3.5 3.3 2.7 3.0 2.9 3.2 2.8 3.0
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2024 2025 2026