Wednesday Dec 11, 2024
Wednesday Dec 11, 2024

NRB maintains existing Monetary Policy


Nepalnews
2024 Nov 29, 12:25,
Nepal Rastra Bank/File photo

KATHMANDU: In its first quarterly review of the monetary policy for fiscal year 2081/82, Nepal Rastra Bank (NRB) has confirmed the continuation of the current policy framework without any new changes.

The review underscores a cautious yet flexible approach to monetary management, driven by an assessment of prevailing economic conditions, inflation trends, and foreign exchange reserve levels.

The primary objective of the monetary policy is to maintain inflation around 5.0%. In the first quarter, the average consumer inflation was 4.26%.

By Ashwin 2081, the annual point-to-point inflation had risen to 4.82%, largely influenced by a 7.18% increase in the food and beverage sector and a 3.49% rise in non-food items and services.

Regarding foreign exchange reserves, NRB's policy goal of maintaining reserves sufficient to cover at least seven months of goods and services imports has been comfortably surpassed.

As of Ashwin 2081, the reserves were adequate to cover 14.6 months of imports, well above the target.

The review also introduced a reduction in the upper limit of the interest rate corridor.

The bank rate was lowered from 7.0% to 6.5%, and the policy rate was cut from 5.5% to 5.0%.

The weighted average interbank rate for banks and financial institutions (BFIs) during the first quarter stood at 3.00%.

The monetary policy had projected a 12.0% growth in broad money supply and a 12.5% increase in private sector credit for the fiscal year.

As of Ashwin 2081, broad money supply had grown by 13.3%, exceeding the target, while private sector credit expanded by 6.2% compared to the same period in the previous year.

In terms of key financial sector indicators, broad money supply grew by 13.3% as of Ashwin 2081, a slight decrease from the 13.9% growth in the same period the previous year. Private sector credit also saw growth, rising by 6.0% year-on-year, up from 4.8% in the corresponding period last year.

Deposits in BFIs increased by 12.8% on a year-on-year basis as of Ashwin 2081, compared to 14.9% growth during the same period in the previous year.


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