- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 12%
The Monetary Policy Committee of the Bank of Mongolia left its policy rate unchanged at 12 percent at its 10–11 December meeting, judging the current stance consistent with bringing inflation back to target in 2026 while supporting economic and financial-sector stability amid steady growth and lingering price pressures. After a 200 bp increase to 12 percent in March 2025, the rate has been held at that level in subsequent meetings. Complementary measures exclude outstanding pension- and welfare-backed loans from banks’ reserve-requirement base, allow one-time extensions of such loans without triggering reclassification, and cut their risk weight to 100 percent—steps the committee says will lower lending costs and ease repayment burdens. Annual inflation eased to 8.2 percent nationwide (8.7 percent in Ulaanbaatar) in November, helped by fading base effects from earlier regulated price hikes, but food prices and planned 2026 wage increases keep upside risks alive; GDP grew 5.9 percent in the first three quarters, driven by agriculture and mining, with the outlook unchanged. Externally, firmer global and Chinese demand and faster-than-expected rises in gold and copper prices have brightened prospects, though uncertainty remains high. Future moves will hinge on domestic and external conditions and the evolving inflation and growth outlook.
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.