Banxico Monetary Policy Statement - 2023-06-22
Central bank: banxico | Type: decision | Date: 2023-06-22

June 22, 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. Several central banks have stopped raising their
reference rates. After having left their reference rates unchanged, some advanced economy monetary
authorities increased them again. 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, short-term government bond yields decreased
while medium- and long -term ones registered limited adjustments . The Mexican peso appreciated.
Economic activity has shown resilience in a complex external environment. 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, registering 5.18% and 6.91%, respectively, in the first fortnight of June. Non-
core inflation remained at historically low levels , reaching 0.03% during the same period . Inflation
expectations for 2023 showed slight adjustments. Longer-term ones remained relatively stable at levels
above target.
Forecasts for headline inflation were revised marginally downwards for some quarters, while those for
core inflation remained practically unchanged. 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) pressures 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) a better functioning of production
and distribution chains; 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 , and 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 June 2023.
2/ Forecast starting May 2023. See monetary policy statement of May 18, 2023. Forecast presented in the Quarterly Report January -March
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 (06/22/2023) 1/ 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
Previous (05/18/2023) 2/ 7.8 8.5 8.0 7.5 6.0 5.2 4.7 4.2 3.7 3.4 3.1 3.1
Current (06/22/2023) 1/ 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
Previous (05/18/2023) 2/ 7.3 8.0 8.4 8.3 7.4 6.2 5.0 4.1 3.5 3.2 3.1 3.1
Annualized seasonally adjusted quartely variation in percent3/
Current - Headline 1/ 10.8 8.2 5.9 5.1 4.0 4.9 4.3 3.0 2.8 3.4 3.1 3.1 2.9
Current - Core1/ 8.8 8.8 8.5 6.9 5.1 4.4 3.6 3.3 2.8 3.0 3.2 3.2 2.8
Forecasts for Headline and Core Inflation
Annual percentage change of quarterly average indices
2022 2023 2024 2025