Mongolia Inflation 2026: Why Mongolbank's Policy Rate Can't Fix Structural Risks

Mongolia has too much money and too little to show for it. Mongolia's broad money supply (M2) expanded by 25.3% year-over-year in April 2026, reaching 51 trillion tugriks (approximately USD 14.26 billion). 

This growth was primarily driven by a 5.5 trillion tugrik increase in local currency deposits and a 2.3 trillion tugrik increase in current accounts. But businesses are building cash buffers instead of investing. They are parking cash in deposits, accumulating foreign currency as a hedge, and waiting.

Central bank of Mongolia

The Bank of Mongolia maintains a hawkish 12% policy rate, but with price growth eroding nominal yields, the real interest rate is merely 2%. This barely positive in real terms explains why corporate capital remains sidelined. 

Meanwhile, credit growth remains positive but is being lapped by liquidity accumulation. The banking system is filling up, but that liquidity is pooling in reserves rather than financing real economic expansion.

Want to read more?

Subscribe to mongoliaweekly.org to keep reading this exclusive post.

Subscribe Now