Policy interest rate unchanged

The Monetary Policy Council of Mongol Bank decided on Friday to maintain the benchmark interest rate unchanged at 11 percent.

By not changing the policy interest rate, the council hopes to stimulate business activity and secure economic stability in the medium term.

The annual inflation was at 8.1 percent in November for Mongolia but rose to 9.3 percent for Ulaanbaatar, according to Mongol Bank. This increase was mainly attributed to the price spike of meat, petroleum and solid fuel (coal and wood). The price of these products alone increased the inflation in Ulaanbaatar by five percentage points.

The central bank forecasts that demand driven through growth in wages and domestic demand will heavily impact inflation next year. Although there’s uncertainty for external environment, profitable trade and low deficit in the balance of payment has made it possible to stabilize the currency exchange rate. In consideration of this, the Monetary Policy Council decided to maintain the current policy rate in order to support business activity.

“The decision is aimed to stabilize inflation near the target rate of eight percent and maintain macroeconomic stability in the medium term," O.Erdembileg told the press after a council meeting.

First Deputy President of Mongol Bank O.Erdembileg says the current gradual pace of economic growth is expected to continue next year.

Mongol Bank raised the benchmark interest rate by one percentage point to 11 percent in late November, saying it was confident that inflation was near the target of eight percent.