Monetary Policy Council of Bank of Mongolia met on June 9th, 30th and July 2nd and concluded that Policy Rate is to remain without any changes.
Announcement made from the Monetary Policy Council states that annual inflation rate expressed by consumer price index dropeed as of May 2015 to 8.0 percent, in Ulaanbaatar city to 7.5 percent and the basic inflation is showing gradual decline at 10.2 percent.
Moreover, the inflation pressure caused by supply is on decrease and the positive forecasts show no increase in demand based inflation in the coming months, therefore leading to the implementation of the inflation goals for the year 2015. Positive changes shown in the balance of payments in the first half of the 2015 forecast the positive outcomes for the second half of 2015 as well.
Hence, the drop of the FDIs to less than 1 percent of the total GDP and increase of the budget spending and losses limit the possibilities of easing the policy rates this time. The keeping of the policy rate is to help to retain the tugrug yield and sustain the foreign macro economic balance.
Monetary Policy Council also emphasized that policy rate easing might be possible if the second half of the 2015 will see the positive increase in the FDI inflow and state budget balance.
Monetary Policy Council has met in total of three times since the beginning of the 2015 of which through the first meeting it increased the policy rate by 1.0 units resulting in policy rate to be 13 percent, while the consecutive meetings have resulted in no change to the policy rate.