E.Batshugar: Original reason of inflation will be treated

The Vice President of the Central Bank of Mongolia, E.Batshugar, spoke to our journalists during the parliamentary discussion on the direction of monetary policy for the State in 2013.

Parliament is discussing the State monetary policy. Can you tell us about the main direction of the monetary policy ?

-The Central Bank submitted to parliament next year`s monetary policy plan and the process of implementing the ongoing monetary policy. This year there are two particular differences than in previous years. First the Central Bank aims to stabilize inflation limiting supply, which is caused by inflation in the medium term by exercising special programs with the Government.
Second, the Central Bank will keep stability in the banking system by implementing combined measures to improve bank risk management and to maintain bank development growth. Implementing these measures successfully will mean the economy will grow in the medium term and living standards will be improved.

-The Government aimed to keep the inflation at one digit. Will this policy remain the same?

-Our task to keep staility in the macro-economy will include this policy. Keeping stability is an effort to keep economic growth by the Central Bank. The Central Bank aims to keep inflation at level 5-7 in 2014-2015 by exercising these measures.

-N.Zoljargal , the president of Central Bank said that it is possible to decrease the policy rate. Will loan interest decrease when the policy rate decreases?

-It is not easy to say so. Because there are many factors such as internal and external macro-economic factors, Central Bank policy, private entrepreneurs` activities and the citizen`s reaction will affect it also. Therefore we should improve the basic ground of the macro-economy by implementing measures to keep stability of the macro-economy. We should first treat the source of inflation before decreasing policy rate.

-Reports said that the Central Bank would extend statutory funds of commercial banks?

-The Central bank decided to increase statutory funds of commercial banks that are significant to the system. This is important to commercial banks to raise capital and improve paying capacity.

-Soon the exchange rate is likely to go down. What is the Central Bank’s policy on this?

-The Central Bank has maintained a policy for the currency rate against the US dollar to keep it flexibly combined with market factors and to intervene during currency destabilization in time of imbalanced demand and supply. This policy will be continued.

SOURCE OF THIS ARTICLE : News.mn