- Decision
- Maintain
- Rate change
- 0 bps
- Policy rate
- 12.5%
The Bank of Mongolia’s Monetary Policy Committee held the policy rate at 12.5% in September, citing the outlook for inflation and economic activity amid elevated domestic and external risks. This followed holds at 12% in December, March and June, representing a net 50-basis-point rise by September. Nationwide annual inflation eased to 12.5% in August as increased meat and vegetable supply slowed domestic food-price growth, while core inflation declined slightly to 6.8%. Inflation is projected to ease gradually from the second quarter of 2027 and approach the upper end of the target interval by year-end, although fuel prices, global food costs, fiscal spending and wages pose upside risks. The economy grew 7.7% in the first half of 2026, led by mining and transportation, while other sectors remained weak and business credit growth stayed relatively high. High gold and copper prices improved the terms of trade and foreign reserve adequacy, helping keep the tugrik relatively stable, while Middle East conflict lifted oil and energy prices and global inflation pressures. The committee said future policy steps will depend on inflation, supply-side factors and external and domestic conditions, with the 2026 budget revision and 2027 draft budget posing material risks to the 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.