Today, Bank of Mongolia (Central Bank) released a statement regarding the policy interest rate. The Monetary Policy Council meeting that convened between 7-11th of February, discussed issues regarding stability of macro-economical and financial environment of the country and made following decision:
– Maintain Policy Interest Rate of 10.5%,
– Ease the requirement of bank’s required minimum reserve of foreign currency on 3 year or longer period bonds and loans that has been raised from international markets.
The council concluded that despite the negative external and internal conditions that created pressure on balance of payments, the targeted inflation is in tact excluding the increase in subsidized goods and services. It also suggested that profitability factor should be considered when implementing mid-term Government and Bank of Mongolia joint projects for stability, and economic growth.
Moreover the council mentioned that decrease of foreign investment, and prolonging of economically significant projects is causing the negative impacts on overall economic immunity. It is the biggest challenge for macro-economic policy of the country. Also, the newly created budgetary expenses in 2013, and its uncertainty is causing dilution on monetary policy implementation.