Bank of Mongolia (BoM) increases the policy rate by 200 basis points, bringing it to 12%

The Monetary Policy Committee of the Bank of Mongolia (BoM) increases the policy rate by 200 basis points, bringing it to 12% during its regular meeting. This decision signals a shift from the easing monetary policy pursued by the Central Bank since early 2024, marking a return to tightening. In the press release, the Governor of the BOM expressed that the central bank anticipates inflation to exceed its target in 2025, driven by demand-side and cost-push pressures, funding for major projects set for this year, and risks related to the balance of payments and the MNT exchange rate. Additionally, the Bank of Mongolia cautioned that prices of key export commodities, such as coal and iron ore, may decline due to expected weaker demand for steel.