Mongolia Interest Rate

Mongolia's central bank kept its benchmark rate at 12%, following a 200-bps hike in March, after assessing the macroeconomy, banking sector, markets, and domestic and global risks. Annual inflation eased to 8.3% in May from 8.6% in April, the lowest since November 2024. Despite earlier-than-expected easing, inflation is expected to stay above the central bank’s 6% ± 2 percentage points target this year. Economic growth slowed to 2.4% year-on-year in Q1 2025, down from 4.9% last quarter, missing expectations, and marking the weakest expansion since Q2 2022. The slowdown was driven by contractions in mining, transport revenues, and tax and trade sectors. External uncertainties from geopolitical tensions and trade policies continue to weigh on demand and commodity prices. The central bank is expected to maintain a cautious and flexible monetary policy, balancing inflation control with growth support amid ongoing risks.