Mongolia's central bank has raised its benchmark interest rate by 2 percentage points to 12 percent amid rising inflation, local media reported on Saturday, citing a statement released by the bank.
This measure aims to curb inflation and promote price stability, said the bank in a statement.
The Central Bank of Mongolia attributed the move to the high "inflationary pressure" the Mongolian economy was currently experiencing. The bank also said that the electricity price increase across Mongolia, its indirect effects and the accompanying economic activity and wage growth have led to higher-than-expected increases in the prices of services, rents, and imported goods.
The inflation expectations are higher than the central bank's target this year, due to increased demand and cost-driven pricing pressures, as well as rising prices for public transportation and other government-regulated goods and services.
In terms of the external environment, uncertainty regarding geopolitical conditions and U.S. trade and tax policies are increasing and leading to expectations of a slowdown in external demand conditions and a relatively gradual decline in external base interest rates.
In addition, due to expectations regarding the demand for steel, the price of Mongolia's main export products, coal and iron ore, may deteriorate from expectations, they added.
In view of this, the central bank experts said that maintaining the key rate at 12 percent will help mitigate the negative consequences of the financial and economic crisis in Mongolia and restore its economy in the medium and long term.
According to official data from the country's National Statistics Office, Mongolia's inflation rate, measured by the consumer price index (CPI), reached 9.6 percent in January 2025. At the same time, in the capital Ulan Bator, where more than half of the country's 3.5 million people live, this figure increased to 9.7 percent.
Mongolia's economy in 2025 is expected to grow by 6.5 percent. According to World Bank experts, economic growth in Mongolia will be mainly supported by increased production in the mining industry and growing domestic demand.

Published Date:2025-03-09