Banxico Monetary Policy Statement - 2024-02-08
Central bank: banxico | Type: decision | Date: 2024-02-08

February 8, 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 maintain the target for the overnight interbank
interest rate at 11.25%.
World economic activity is anticipated to have grown during the fourth quarter of 2023 at a more moderate
rate than in the previous quarter, although it continues showing resilience. In most advanced economies,
headline inflation increased due to pressures on energy prices while core inflation continued decreasing.
The central banks of these economies left their reference rates unchanged. Government bond yields at
a global level reversed part of the decline registered in the last months of 2023. Among key global risks
are the intensification of geopolitical turmoil, the protraction of inflationary pressures , tight financial
conditions, and, to a lesser extent, the challenges to financial stability.
In Mexico, government bond yields registered mixed adjustments for the short and medium terms , and
moderate increases for the long term. The Mexican peso appreciated slightly. The Mexican economy
experienced robust growth in 2023, although during the last quarter it slowed down more than anticipated.
The labor market remained strong.
Since the last monetary policy meeting, annual headline inflation has increased. During January, it
registered 4.88% as a result of a rebound in the non-core component, which is characterized for showing
high volatility. Core inflation, which better reflects the trend in inflation, continued decreasing.
Nevertheless, it remains at relatively high levels, registering 4.76% during the same month. Expectations
for headline inflation for the end of 2024 increased, while those for longer terms remained relatively stable
at levels above target.
The forecast for headline inflation was revised slightly upwards for the short term. Supply shocks on
some specific items of the non- core component basically account for said adjustment. Nevertheless,
headline inflation is still foreseen to converge to the target in the second quarter of 2025 (see table).
Projections for core inflation throughout the forecast horizon remain practically at the same levels of the
previous monetary policy meeting. The disinflation process is expected to continue, in view of the
monetary policy stance and the easing of the shocks generated by the pandemic and the war in Ukraine.
These projections are subject to risks. On the upside: i) persistence of core inflation at high levels; ii)
foreign exchange depreciation; iii) greater cost-related pressures; iv) a greater-than-expected resilience
of the economy, v) climate-related impacts; and vi) the intensification of geopolitical conflicts . On the
downside: i) a greater-than-anticipated slowdown of the world economy; ii) a lower pass -through effect
from some cost-related pressures, and iii) that the lower levels registered by Mexico’s exchange rate in
relation to the first months of 2023 contribute more than anticipated to reduce certain pressures on
inflation. The balance of risks for the trajectory of inflation within the forecast horizon remains biased to
the upside.
The Governing Board evaluated the effects of the shocks on inflation and its determinants, along with
the behavior of medium - and long -term inflation expectations and the price formation process. It
acknowledged the disinflationary process in Mexico. Nevertheless, it estimated that the outlook is still
challenging. Based on the above, and taking into consideration the monetary policy stance already
attained and the persistence of the shocks that the Mexican economy is facing, 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. In the next monetary policy meetings, it will assess,
depending on available information, the possibility of adjusting the reference rate. It will take into account
the progress in the inflation outlook and the challenges that prevail. It will also consider the incidence of
both the restrictive policy stance that has been maintained and that prevailing in the future on inflation
throughout the horizon in which monetary policy operates. Ac tions 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 February 2024.
2/ Forecast starting December 2023. See monetary policy statement of December 14, 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
Headline (CPI)
Current (02/08/2024) 1/ 7.5 5.7 4.6 4.4 4.7 4.3 3.9 3.5 3.2 3.1 3.1 3.1
Previous (12/14/2023) 2/ 7.5 5.7 4.6 4.4 4.3 4.1 3.8 3.5 3.2 3.1 3.1 3.1
Current (02/08/2024) 1/ 8.3 7.3 6.2 5.3 4.6 4.1 3.7 3.5 3.2 3.1 3.1 3.1
Previous (12/14/2023) 2/ 8.3 7.3 6.2 5.4 4.7 4.1 3.7 3.5 3.2 3.1 3.1 3.1
Annualized seasonally adjusted quarterly variation in percent3/
Current - Headline 1/ 4.9 3.6 4.4 5.2 5.0 2.8 3.1 3.2 3.6 2.7 3.1 3.1
Current - Core1/ 7.2 5.3 4.6 4.4 4.1 3.4 3.2 3.4 3.0 3.0 3.2 3.2
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2023 2024 2025