- Decision
- Maintain
- Rate change
- 0 bps
- Policy rate
- 12%
The Bank of Mongolia’s Monetary Policy Committee kept its policy rate at 12.0 % at the 18–20 March meeting, judging that the recent drop in headline inflation to 6.5 % in February—near the midpoint of the 4–6 % target band—was encouraging but outweighed by heightened geopolitical risks and the prospect of higher fuel and food prices that could rekindle price pressures. After a 200 bp hike in March 2025, the Committee has maintained the rate at 12 % through subsequent reviews. No changes were announced to other operational settings. The authorities noted that disinflation has been driven by softer non-food prices, while brisk food costs have recently turned upward; inflation is still projected to stay within the target range, supported by last year’s tightening. Economic growth, led by agriculture, mining and industry, is forecast to accelerate to 6.8 % in 2025 before converging toward potential, bolstered this year by mining output and large-scale construction projects. High global gold and copper prices are improving terms of trade, yet Middle East tensions pose downside risks to external demand and upside risks to commodities. The Committee reiterated its objective of anchoring inflation at 5 % ±2 pp from 2027 and will adjust policy as incoming data on inflation, supply factors and global conditions evolve.
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.