The Monetary Policy Council of Mongol Bank has decided to keep the central bank’s official interest rate at 10.5 percent.
The council members reported, “The consumer price index annual inflation fell to 1.6 percent as of June 2016, and core inflation has gradually decreased to 2.9 percent, meeting the targeted level. As of the first half of 2016, inflation performance met Mongol Bank’s projections.”
Mongol Bank believes that the pressure on demand-based inflation will not increase due to short-term economic boosts, and the inflation rate is expected to meet Mongol Bank’s assumptions by the end of this year.
The council said that even though the instability of external macroeconomic conditions continues, market risk is expected to be mitigated by improvements to sustainable governance. Foreign direct investment in Mongolia is expected to increase by the second half of 2016, and Mongol Bank predicts that this will support domestic demand and support real economic growth at levels comparable to 2015.
Mongol Bank believes that their decision to maintain the current monetary policy rate will provide possibilities to increase the nation’s money supply through loans from the private sector and that it will support the nation’s economic activity.