BoM reduces its policy rate to 10 percent

Ulaanbaatar /MONTSAME/. At its regular meeting held today, the Monetary Policy Committee of the Bank of Mongolia (BoM) made a decision to reduce the policy rate to 10.0 percent, reducing it by 1.0 percentage point. Moreover, the committee lowered the reserve requirement ratio of tugrug by 2.0 percentage point to 8.5 percent and set the interest rate corridor to +1 and -1 percentage points on the policy rate. The Monetary Policy Committee issued a series of policy decisions to support financial intermediation, reduce the cost of banks' funding sources and intensify economic activities. The decision is aimed at maintaining economic and financial stability without damaging the inflation target. As of January, the annual inflation rate was 5.6 percent for Mongolia, while it was 6.0 percent in Ulaanbaatar city. Demand-based inflation has a tendency to remain steady while economic growth is likely to slow down. On the other hand, the slowdown in the supply of certain imported foods could cause supply-based fluctuation in inflation. In addition, there is a risk that external demand and commodity prices could decrease, foreign and domestic economic activity weaken and economic growth continues to slow down as COVID-19 increases uncertainty in economy. In the future, its impact on the economy will largely depend on cope and duration of the COVID-19 spread and the measures taken against it. Despite the increasing risks of declining export revenue, downward trend in consumer imports continues and the rapid drop in oil prices in the world market will ease the pressure on the tugrug, according to the BoM.