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.

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