Mongol Bank raises interest rate

Mongol Bank has decided to increase the interest rate by half a percentage point to 13.25 percent and the required reserve rate by 1 percentage point to 12 percent. This was the second time the central bank has raised interest rates in recent months.

The national average consumer price index increased notably by 15.3 percent in March year on year and the index for the capital city of Ulan Bator rose by 17.3 percent, according to the National Statistical Office. The surging inflation was mainly caused by soaring meat prices during the first three months of 2012.

Meat prices, which increased by 51.8 percent, contributed to 68.2 percent of the inflation, the central bank said in a press release. Increasing demand caused by foreign investments and demand generated by budget expenses may push inflation even higher.

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