AKIPRESS.COM - The Bank of Mongolia decided to increase the policy rate by 2.5 percentage points to 9.0 percent, taking into consideration the current state of the economy and financial markets as well as the outlook for the domestic and foreign economic environment, Montsame reports.
The tension arisen in international relations recently has become an additional source of uncertainty in the foreign and domestic economy. As the range of uncertainties widened, commodity prices especially prices of crude oil and food rose sharply in the international markets, and supply chain disruptions are expected to persist, many countries are subject to risks of higher inflation and lower economic growth for this year than previously expected.
Annual headline inflation reached 14.2 percent nationwide and 15.5 percent in Ulaanbaatar city as of February 2022. Elevated prices of food and petroleum in the international markets, transportation, and logistic restrictions, which incur further transportation costs, as well as supply disruptions have been identified as the main factors explaining recent inflation developments. Though inflation has gradually decelerated in February consistent with our previous projections, the current inflation outlook is being revised upwards due to the international tension arisen recently.