At its regular meeting, the Monetary Policy Committee (MPC) of the Central Bank of Mongolia decided to maintain the policy interest rate at 10 percent and increase the minimum reserve requirement in both domestic and foreign currency by 1 percentage point, reaching 11 percent and 16 percent respectively.

Annual inflation rose to 8.1 percent nationwide in November 2024, up from 7.0 percent in October, driven mainly by a significant increase in electricity prices. An increase in electricity price contributed 1.9 percentage points to November’s annual inflation, compared to 0.6 percentage points in October. In addition, the higher-than-expected price increases in services, rent, and imported goods, driven by accelerated domestic demand and rising wages, have further fueled inflationary pressure in recent months. The demand-side pressures from fiscal expansion as well as the indirect effects of the administrated price increases are expected to push inflation higher in the first half of 2025, followed by a gradual decline afterward.

The economy grew by 5.0 percent in the first three quarters of 2024. The slowdown was primarily driven by weakened activities in the construction and manufacturing sectors, alongside lower-than-expected production of copper and gold. As a result, the growth forecast for 2024 has been revised downward. However, economic growth is projected to pick up next year, supported by fiscal expansion, increased production of Oyu Tolgoi, and the easing of adverse effects from the recent dzud natural disaster.

With the inflation rate expected to stabilize within the target range by 2026, the MPC decided to keep the policy rate at 10 percent to maintain stable medium-term growth while avoiding excessive tightening of credit and financial conditions.

To prevent risk accumulation in the financial sector and ensure financial stability, the MPC also decided to raise the reserve requirements in domestic and foreign currency liabilities by 1 percentage point each.

These policy decisions align with the objectives of stabilizing inflation at the target level and ensuring macroeconomic and financial stability over the medium term, reported the Central Bank of Mongolia.