Mongolia’s benchmark rate will remain at 11 percent, announced Mongol Bank’s Monetary Policy Committee on Wednesday.

This decision was made to stabilize inflation at the target level and medium-term macroeconomic and financial situation, the banks said.

“The Monetary Policy Committee unchanged the policy rate this time in consideration of the current macroeconomic state, future trends, unclear external and internal impacts, and risks. Looking at the external environment and domestic economic activity, the inflation rate will likely stay stable at the target level,” said Deputy President of Mongol Bank B.Lkhagvasuren.

As of May 2019, the annual inflation rate stood at 7.9 percent at the national level due to a dramatic surge in meat prices. This increase was connected to fuel price hikes and low supply of meat. Nevertheless, demand-based inflation remains stable, said B.Lkhagvasuren.

“The mining sector exceeded expectations in the first quarter of this year, business loans have been steadily increasing, and investment and fiscal expenditure have been growing, which is boosting economic growth,” B.Lkhagvasuren stressed.

Since last month, there have been conflicts in the international market and mutual increases to import tariff by the USA and China is adversely impacting the global economy and mineral prices, which is causing uncertainty in the external environment. The committee predicts this will worsen foreign trade conditions as it overlaps with the deadline of large mining projects and repayment date of hefty foreign debts. It underlined the need for the whole country – state, organizations, families and individuals alike – to increase savings and financial resources.

“It’s crucial to improve fiscal discipline, risk management capability in the banking sector, and central bank’s independence in order to overcome potential risks from the external environment and ensure medium and long-term economic stability,” the central bank recommended in a statement.