BoM decides to remain policy interest rate at 9%
3 өдөр, 14 цаг өмнө
On Friday, the Monetary Policy Committee (MPC) of the Bank of Mongolia (BoM) convened and remained the policy interest rate at 9 percent. For the purpose of providing the stability of banking systems, the committee decided to decrease the dollarization of the bank's resources and maintain the relative return of the tugrik, and a macro-prudential policy decision was made to reduce the MNT required reserve premium as a percentage of high-interest foreign currency deposits and interest-bearing foreign currency current accounts. Previously, the Monetary Policy Committee held an unscheduled meeting on the 13th of April 2020. The Committee had decided to lower the policy rate by 1 percentage point to 9 percent and to extend the maturity limit on consumer loans up to 12 months for lenders experiencing difficulty in their loan repayments. Annual headline inflation reached 6.4 percent nationwide and 6.9 percent in Ulaanbaatar city as of February 2020. The demand induced inflation is expected to be subdued as the economic growth slacks this year. The supply-driven volatility in inflation is anticipated to decline if the supply of some imported foods remains stable, along with a falling domestic price of fuel following the drop in global oil price. MPC also updated its forecast for a 0.9 percent contraction this year. The World Bank, the International Monetary Fund, the Asian Development Bank have been updated expectations of Mongolia’s economic growth previously. In addition, ADB emphasized that Mongolia needs sustainable reform in a newly released report. In accordance with the prediction, by focusing on improving macroeconomic management, strengthening human development, expanding international trade, and diversifying the economy based on the knowledge and experience gained in the mining and other sectors, Mongolia can build a stable and inclusive economy. The report also stressed that increasing private sector participation in infrastructure sectors such as transport, telecommunications, and energy will contribute to Mongolia’s long-term sustainable economic growth. Concerning the revised forecast by ADB, Mongolia’s economy will shrink by 1.9 percent in 2020 and increase by 4.7 percent in 2021.