The Bank of Mongolia kept its benchmark interest rate unchanged at 12.5% at its September 2026 meeting, following a 50 basis-point increase in August. The decision came as annual inflation eased to 12.5% in August, while core inflation edged down to 6.8%.
Inflation is projected to gradually decline from the second quarter of next year and return to the upper bound of the target range by year-end. However, policymakers cautioned that rising fuel and global food prices linked to the conflict in the Middle East, along with higher government spending and wages, could revive inflationary pressures.
The inflation outlook also remains highly sensitive to fiscal policy, as revisions to this year’s budget and the passage of next year’s budget could significantly alter the inflation path.
On the growth front, the economy is expected to expand by 7.7% in the first half of 2026, driven primarily by the mining and transport sectors, while activity in other sectors remains comparatively subdued.
