-Monetary Policy Committee of the central bank maintained the policy rate for three consecutive meetings this year. Especially, the last decision has been made amid suggestions to decrease the rate slightly. What was the main reason to keep policy rate unchanged again?

-Well, inflation is likely to be stabilized around the central bank’s target rate, economic growth may slow, and the
uncertainty in the economic situation may proceed. These are the main three reasons. Growth of the bigger economies is expected to decrease in the following year, which will affect Mongolia directly. Therefore, the burden on the foreign trade balance and the exchange rate may increase as 2020 is the election year. BoM’s reform in the economy has not been completed yet, so the interest rate con not be decreased before we see any results. The policy of economic restructuring or the allocation of inter-sectoral capital has not been implemented completely. Considering all the situations mentioned above, the committee decided to keep the policy rate, rejecting the suggestion to decrease it by 0.5 percentage points.

-What measures should be taken to accelerate economic growth?

-We need to increase our export productivity and supply. To do this, we should speed up the completion of railway projects, such as the Tavantolgoi-Gashuunsuhait, and the customs modernization projects. As a result, the incoming currency in Mongolia may increase, enabling the possibility to stimulate economic growth through monetary policy from the central bank.

-Is it possible to prevent external economic risks by increasing foreign exchange reserves when government bond repayments are due in 2020?

-Foreign currency reserves are intended to finance short-term debts and deficits. In other words, it is important for balancing the short-term foreign trade deficit and in case of sharp fluctuations in exchange rates.