Mongolia holds rate, boosts Q3 long-term financing

     Mongolia's central bank kept its policy rate steady for the third time but once again increased the amount of longer-term financing available, saying growth of economic sectors is different, the outlook is uneven and uncertainty is not decreasing due to the domestic spread of the COVID-19 virus.
    The Bank of Mongolia (Mongolbank) left its policy rate steady at 6.0 percent, unchanged since November last year when it was lowered for the fourth time in response to the pandemic.
     In 2020 BM cut its policy rate by a total of 500 basis points from March through November and also lowered banks' reserve requirements, suspended debt-service-to-income ceilings on loans and provided longer-term financing to the banking sector.

     For the third quarter, the central bank said it would increase the amount of long-term financing by 250 billion tughrik, down from 350 billion provided in the second quarter but the same as in the first quarter.

    "The current monetary policy outlook is in line with the inflation target, and further policy adjustments will be made to meet the inflation target in line with economic activity and outlook," Mongolbank said.

     Mongolia's inflation rate rose to 6.2 percent in May from 5.6 percent in April, within the bank's target range of 6.0 percent, plus/minus 2 percentage points.

      Mongolbank said some of the inflation was driven by the economic recovery while most of it was attributed to underlying effects and temporary supply factors.

      "As a result of these factors, inflation will increase in the short term, but will stabilize around the target from 2022," the bank said.

     www.CentralBankNews.info