Banxico Monetary Policy Statement - 2024-06-27
Central bank: banxico | Type: decision | Date: 2024-06-27

June 27, 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 11.00%.
World economic activity is expected to continue increasing during the second quarter of 2024, although
at a slower pace than in the previous quarter. In most advanced economies, headline and core inflation
continued decreasing. The US Federal Reserve left the federal funds rate unchanged while some central
banks of advanced economies lowered their reference rates. International financial markets registered
limited movements. 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.
The presence of idiosyncratic factors generated high volatility in Mexico’s financial markets. Medium -
and long-term government bond yields increased significantly. The Mexican peso depreciated noticeably.
However, more recently, domestic financial markets have displayed a better behavior. At the beginning
of the second quarter of 2024, Mexico’s economic activity continued exhibiting t he weakness observed
since the end of 2023. The balance of risks to growth of economic activity is biased to the downside.
Annual headline inflation rose from 4.65 to 4.78% between April and the first fortnight of June 2024, as
a result of an increase in the non-core component. Core inflation, which better reflects the inflation trend,
continued decreasing, from 4.37 to 4.17% during the same period. Expectations for headline inflation for
the end of 2024 were revised upwards, while those for core inflation decreased slightly. Those for longer
terms remained relatively stable at levels above target.
The disinflation process is expected to continue. Although the depreciation of the Mexican peso impacts
the inflation forecast upwards, its effects are partly offset by those associated with the greater weakness
exhibited by economic activity. The forecasts for headline and core inflation have been revised slightly in
certain quarters. 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 vi) the
intensification of geopolitical conflicts. On the downside: i) weaker-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.
The Governing Board assessed the behavior of inflation and its determinants, as well as of inflation
expectations. It stated that the challenges and risks in both sides of the balance call for continuing
conducting monetary policy prudently. With the presence of all its members, the Board decided by
majority to maintain the target for the overnight interbank interest rate at 11.00%. With this decision, the
monetary policy stance remains restrictive and will continue being conducive to the convergence of
inflation to the 3% target in the forecast horizon.
Looking ahead, the Board foresees that the inflationary environment may allow for discussing reference
rate adjustments. It will take into account the prospects that global shocks will continue dissipating and
the effects of a weaker -than-anticipated economic activity. It will consider the incidenc e 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. Actions will be implemented in such a way that the
reference rate remains consistent a t 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.
Voting in favor of the decision were Victoria Rodríguez, Galia Borja, Irene Espinosa and Jonathan Heath.
Voting in favor of lowering the target for the overnight interbank interest rate by 25 basis points to 10.75%
was Omar Mejía.
1/ Forecast starting June 2024.
2/ Forecast starting April 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.
III IV I II III IV I II III IV I II
Headline (CPI)
Current (06/27/2024) 1/ 4.6 4.4 4.6 4.7 4.5 4.0 3.5 3.3 3.1 3.0 3.0 3.0
Previous (05/09/2024) 2/ 4.6 4.4 4.6 4.6 4.4 4.0 3.5 3.3 3.2 3.0 3.0
Current (06/27/2024) 1/ 6.2 5.3 4.7 4.2 4.1 3.9 3.6 3.3 3.1 3.0 3.0 3.0
Previous (05/09/2024) 2/ 6.2 5.3 4.7 4.3 4.0 3.8 3.5 3.3 3.2 3.0 3.0
Annualized seasonally adjusted quarterly variation in percent3/
Current - Headline 1/ 4.1 5.0 4.9 3.6 3.6 3.4 3.1 2.9 3.1 2.8 3.0 2.9
Current - Core1/ 4.5 4.7 4.2 3.9 3.6 3.6 3.0 2.8 3.0 3.1 3.0 2.8
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2023 2024 2025 2026