- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 10%
The Bank of Mongolia’s Monetary Policy Committee left the policy rate at 10 percent at its 14 January unscheduled meeting but tightened its stance by lifting reserve requirements on domestic-currency deposits to 13 percent and on foreign-currency deposits to 18 percent, aiming to counter above-target inflation and rein in credit-fuelled demand. The higher ratios are intended to curb the persistently strong bank credit expansion that has been driving domestic demand and consumption imports and raising financial-sector risks. Nationwide inflation reached 9.0 percent in December 2024 (9.1 percent in Ulaanbaatar) on surging electricity, meat and imported-goods prices, with further pressure expected from wage growth, fiscal expansion and dividend payouts by Erdenes Tavan Tolgoi. The committee judged domestic and global growth prospects little changed but underscored elevated geopolitical uncertainty. It said future actions will depend on the evolving external and domestic environment and the outlook for inflation and economic growth.
Rate evolution
The Bank of Mongolia’s early decisions to keep the policy rate at 12 percent reflected inflation slowing on softer food and imported goods prices and past tightening, while mega-project financing, export revenues, the exchange-rate outlook and weather posed upside risks as growth moved from a slowdown to a recovery driven by agriculture, mining and large projects. By December, the Monetary Policy Committee still expected inflation within target in 2026, but said poor harvests, firm meat prices and projected wage increases had lifted the outlook, even as lower-than-feared tariff effects and stronger gold and copper prices improved external conditions.
In March 2026, it again held the policy rate at 12 percent as inflation fell to 6.5 percent near the midpoint of the target range, while warning that faster food prices, higher fuel and food costs, and geopolitical uncertainty linked to the Middle East conflict could intensify inflation. The Bank of Mongolia maintained the policy rate at 12 percent on June 23 and 24 as annual inflation reached 11.2 percent nationwide and 11.0 percent in Ulaanbaatar in May on supply-side pressures, while first-quarter growth accelerated to 7.9 percent on mining and transportation and most non-mining sectors remained weak.
On September 16 and 17, the Bank of Mongolia held the policy rate at 12.5 percent as annual inflation in August declined to 12.5 percent nationwide and 11.6 percent in Ulaanbaatar, supported by increased meat and vegetable supplies, while core inflation eased to 6.8 percent and first-half growth reached 7.7 percent on mining and transportation. It projected inflation would begin easing gradually from the second quarter of 2027 and approach the upper bound of the target range by year-end, but flagged risks from fuel-price pass-through, global food prices, fiscal spending, wage growth and budget decisions, while noting that high gold and copper prices had supported the terms of trade, foreign exchange reserves and the exchange rate.