Transparency and expectations management

Fiscal expansion, supply-driven price increases, and uncertainty in both the domestic and external environments are increasing the risk that inflation expectations among households, businesses, and financial market participants will remain elevated. Supply-side shocks involving meat, vegetables, and fuel not only generate second-round effects on core inflation but also raise expectations of future inflation in the economy. If inflation expectations become entrenched at high levels in public perceptions, businesses may raise the prices of goods and services in advance, employees may exert pressure for wage increases, and inflation may remain above its target over an extended period.

In periods of heightened economic uncertainty, information asymmetries among market participants may widen, increasing the risk that artificial demand and speculative expectations driven by misinformation and rumors will prevail. Even when monetary policy decisions are well-founded, their effectiveness in the real economy may be weakened if the rationale behind the decisions, macroeconomic projections, and risk assessments are not communicated to the public in a clear and transparent manner. Therefore, the central bank needs to implement a new communication strategy that leverages collaboration with professional analysts and specialist media outlets to ensure that monetary policy information is communicated effectively and accessibly to the public, businesses, and investors.

The Bank of Mongolia’s Medium-Term Strategy (2026–2030) sets out measures to improve the effectiveness of public communication and enhance the central bank’s transparency and accountability. Within this framework, under the core objective of effectively managing public expectations, the Bank aims to explain its objectives, functions, and policy decisions clearly and transparently in a timely manner, while continuously expanding the reach and accessibility of its communications.

• Promptly communicate Monetary Policy Committee decisions, the rationale underpinning them, and medium-term macroeconomic projections to the public through accessible channels in a clear, transparent, and timely manner. This will provide market participants and investors with forward guidance on the future trajectory of the policy rate, helping them form expectations about the direction of monetary policy and reducing economic uncertainty.
• Ensuring the coherence of policy communication: Ensure that information disseminated by the Bank of Mongolia is accurate, united, and coherent, and strengthen strategic communications based on the “one voice” principle.
• Communicate the monetary policy stance clearly and transparently: Implement communication initiatives to convey the objectives and decisions of monetary policy, the rationale behind those decisions, the economic outlook, and key risks to the public and financial markets in a clear and accessible manner, with the aim of anchoring inflation expectations in line with the monetary policy objective.
• Develop targeted and inclusive communication: Modernize and enhance financial education initiatives to address the information needs and requirements of households, businesses, financial market participants, and other target groups, while improving the content, format, and accessibility of information.
• Develop research and analysis-based communication: Improve the methodology, coverage, content, quality, and accessibility of sample surveys measuring households’ inflation expectations, analysts’ macroeconomic forecasts, and business sentiment.
• Use monetary policy and macroprudential policy reports and statistical releases as strategic tools to anticipate and shape inflation expectations among financial market participants and disseminate them promptly to the public according to a pre-announced publication schedule.
• Improve the content, accessibility, and usability of reports and statistical information produced by the Bank of Mongolia, and regularly disseminate clear, easy-to-understand content to enhance public understanding of monetary policy and economic conditions.
• Expand access to information by developing effective formats and communication channels to disseminate policy-related information to regional communities and target groups.

Public understanding of monetary policy objectives, decisions, their underlying rationale, and the economic outlook will improve, alongside greater transparency, clarity, and accessibility of information. This will help create conditions for inflation expectations among households, businesses, and financial market participants to become anchored in line with the medium-term inflation target, thereby reducing economic uncertainty. As a result, the effectiveness of monetary policy decisions in influencing financial markets will improve, while the transparency and consistency of central bank policy and public confidence in policy decisions will be strengthened.