Central Bank Increases Policy Interest

Mar 18 • Economy, Government • 423 Views • No Comments on Central Bank Increases Policy Interest

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Tightening the monetary policy again, the Mongolbank increased the policy interests by 1.35 points up to 9.75 percent. The policy interest of the Central bank is presented by securities interest of the Central Bank weekly and it serves as the interbank guide interest. On November and December 2007 policy interests have been increased twice by 1 point respectively up to 8.4 percent. The primary reason for increasing interests lies in slowing down speed of monetary and loan growths and decreasing inflation. Monetary policy has been tightened since mid-2007, growth speed of monetary supplement elements has been slowed down and its amount is not increasing, however influences of factors contributing to inflation is still strong.       

This measurement, carried out by the Mongolbank, aims to slow down continuous expansion of budget policy and price increase. Considering changes in demand section of macro economy, the Mongolbank shall decide whether to increase policy interest. On the other hand, factors in supply section tend to affect the price increase. Increasing price of oil and wheat in the world market and high rate of Chinese Yuan affects the inflation. Outcome of Government measures on eliminating rapid price growth of commodity goods and products would be of great importance in reducing inflation pressure. Assets resource of the banks is relatively good, supply is constant /M2 has increased by 0.7 percent since the beginning of the year/ and deposits of domestic and foreign currencies have increased though loan interest tends to increase as well.   

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