Mongolia’s central bank maintained its key interest rate at 12% during a recent Monetary Policy Committee meeting, despite ongoing inflationary pressures. While the bank continues a tight monetary policy, committee members expressed concern that government spending is undermining its efforts to control inflation. Independent members highlighted a significant increase in government current expenditure over the past 1-2 years, limiting the central bank’s ability to lower interest rates. They argue that increased government spending is fueling demand and driving up prices. Committee member R.Davaadorj noted the state budget has doubled in the last four to five years, from 18 trillion to 36 trillion Mongolian Togrog, and this expansion is negatively impacting inflation. The central bank’s effectiveness is hampered by a lack of coordination between monetary and fiscal policies, as the government continues to increase spending and make extensive commitments.