Central bank decides to maintain policy rate at 6 percent www.montsame.mn
The Monetary Policy Committee (MPC) of the Bank of Mongolia held a scheduled meeting on September 16, 2021. With due consideration to the current state of the economy and financial markets, as well as to future outlook and risks inherent in domestic and foreign environments, the MPC decided to:
1. Keep the policy rate at 6 percent;
2. Increase the amount of long-term repo financing instrument by up to MNT 100 billion in the fourth quarter of this year.
Annual headline inflation stands at 8.9 percent nationwide and 9.1 percent in Ulaanbaatar city as of August 2021. Inflation is rising due to the economic recovery, but most of it is due to the base effects and temporary supply-related factors. As a result of latter, the headline inflation is expected to temporarily increase, however, it will stabilize around the central bank’s target level in 2022. However, due to the global economic recovery, international supply chains and logistics disruptions, there is a risk that external inflation and world food and fuel prices will exceed expectations, and that supply-side inflation in the domestic market will increase.
Global economic growth has accelerated and the prices of most exports have remained high, but the positive effects have been less than expected. The spread of new variants of the coronavirus around the world, reducing the effectiveness of vaccinations and increasing caution, are creating uncertainty caused by the pandemic in the external and internal economic environment.
In times of pandemic, the central bank's monetary and macroeconomic policies and fiscal stimulus measures are supporting economic recovery and financial sector stability.
The current monetary policy stance is in line with the inflation target of the central bank. The policy adjustments aiming to maintain inflation under its target range shall be taken place inconsistent with the economic recovery and outlook.