<Monetary policy statement:
Monetary Policy statement:
Increasing the policy rate
Number: 2018/04
Effective date: 27 November 2018
At the unscheduled meeting held on 27 November 2018, the
Monetary Policy Committee decided to increase the Policy rate by 1.0 percentage
point to 11 percent.
As of October 2018, annual
inflation measured by the consumer price index has reached 6.3 percent
nationwide and 6.8 percent in Ulaanbaatar city. Although the price of
commodities remained relatively high and economic growth reached 6.7 percent in
the third quarter, exceeding previous expectations, uncertainties in the
external sector remain elevated.
Approval of next year’s budget with a relatively high level of
deficit, the US Federal Reserve’s decisions to raise its federal funds rate,
and the People’s Republic of China’s action to limit its coal imports, are
adversely affecting the balance of payments and thus creating pressures on the
exchange rate. Hence, considering the uncertainties in the external sector,
with the intention to preserve economic recovery at a medium term sustainable
path, the Monetary Policy Committee decided to increase the policy rate, during
its unscheduled meeting.
The decision is consistent with the Bank’s mandate to keep
inflation rate around the medium term target rate and is intended to increase
yield for assets in togrog, to support credibility of the national currency,
and to sustain macroeconomic stability in the medium term.
The Bank of Mongolia decided to issue central bank bills with
maturities of 28 weeks, starting from December 2018.
Extracts of the meeting minutes will be released in two weeks on
the Bank of Mongolia’s website.
MONETARY POLICY COMMITTEE OF MONGOL BANK, MONGOLIAN CENTRAL BANK
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