Banxico Monetary Policy Statement - 2023-11-09
Central bank: banxico | Type: decision | Date: 2023-11-09

November 9, 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%.
During the third quarter of 2023, heterogeneity in economic activity across countries intensified. Headline
inflation continued decreasing in most economies. Nevertheless, it remains at high levels. Core inflation
decreased, although more gradually than headline inflation. Most central banks of the major advanced
economies left their reference rates unchanged. These rates are expected to remain at high levels for an
extended period. Sovereign interest rates increased worldwide and the US dollar registered a generalized
appreciation, although recently these trends reverted. Among key global risks are the persistence of
inflationary pressures, the worsening of geopolitical turmoil, tighter financial conditions, and, to a lesser
extent, the challenges to financial stability.
In Mexico, government bond yields increased for all terms and the Mexican peso depreciated. However,
in line with developments in international financial markets, these adjustments also tended to revert.
Economic activity continued experiencing robust growth and the labor market remained strong.
Since the last monetary policy meeting, annual headline and core inflation continued decreasing.
However, they remained high, registering 4.26% and 5.50%, respectively, in October. Non-core inflation
remained at unusually low levels, reaching 0.56% during that month. Expectations for headline inflation
for the end of 2023 remained unchanged while those for core inflation decreased. L onger-term ones
remained relatively stable at levels above target.
The easing of the shocks resulting from the pandemic and the geopolitical conflict, along with the
monetary policy stance, have contributed to inflation’s downward trend. The forecasts continue
anticipating that both headline and core inflation will remain on a downward trend. Inflation is still foreseen
to converge to the target in the second quarter of 2025 (see table). 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 , and v) pressures on
energy prices or on agricultural and livestock product prices . On the downside: i) a greater -than-
anticipated slowdown of the worl d 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 early 2023
contribute more than as 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 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 acknowledged the progress of the disinflationary process in Mexico. Nevertheless,
it deemed 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. It considers that, in order to achieve an orderly and
sustained convergence of headline inflation to the 3% target, the reference rate must be maintained at
its current level for some time . The latter , taking into account that although the outlook remains
complicated, progress on disinflation has been made. 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 October 2023.
2/ Forecast starting September 2023. See monetary policy statement of September 28, 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.
III IV I II III IV I II III IV I II III
eadline (CPI)
Current (11/09/2023) 1/ 8.5 8.0 7.5 5.7 4.6 4 .4 4.3 4.0 3.7 3.4 3.2 3.1 3.1
Previous (09/28/2023) 2/ 8.5 8.0 7.5 5.7 4.6 4 .7 4.4 4.0 3.7 3.4 3.2 3.1 3.1
Current (11/09/2023) 1/ 8.0 8.4 8.3 7.3 6.2 5 .3 4.5 3.9 3.5 3.3 3.2 3.1 3.1
Previous (09/28/2023) 2/ 8.0 8.4 8.3 7.3 6.2 5 .3 4.5 3.9 3.5 3.3 3.2 3.1 3.1
Annualized seasonally adjusted quarterly variation in percent3/
Current - Headline 1/ 8.7 6.1 5.0 3.9 4.4 4 .9 4.0 3.0 3.3 3.2 3.2 2.9 3.3
Current - Core1/ 8.9 8.3 7.1 5.3 4.6 4 .4 3.5 3.0 3.2 3.4 3.0 2.7 3.3
2022 2023 2024 2025
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices