Head of Mongol Bank’s Monetary Policy Department B.Bayardavaa discusses monetary policy in 2018
Mongol Bank recently presented the outline for the monetary policy in 2018 to the government. Director General of the Monetary Policy Department at Mongol Bank B.Bayardavaa answered few questions regarding this directive.
Please briefly introduce the general direction of the monetary policy in 2018?
The directive for next year’s monetary policy is to be intertwined with the macro economy and with issues that need to be addressed. Our first priority was to stabilize prices. There is a goal to maintain the inflation rate at eight percent in the next three to four years. Secondly, the accountability of the monetary policy was improved. Thirdly, we wanted to focus on improving financial mediation, and improving and developing the risk based regulation. Mongol Bank also included an article that supports the implementation of the law on payment.
Last year’s directive stated that the inflation rate should be no higher than seven to eight percent. This year was no different. Why was there no change?
This year, our main goal was not to decrease inflation but rather to stabilize it. After it has stabilized, dependent on economic performance, we will work to gradually decrease the inflation rate. In order to achieve this, we are maintaining several strategies. First and foremost, decisions on the monetary policy are supposed to be reached collectively.
In this aspect, the Monetary Policy Department has had a large role. In other words, the operations of the Monetary Policy Department have been incorporated into the Law on Mongol Bank. In our new directive, we have included procedures that state that tightening the monetary policy due to supply discrepancies in the global market is not ideal.
For example, we have chosen to search for alternative routes to tightening the monetary policy if the price of petroleum increases due to external forces.