First Quarterly Review of Monetary Policy Released: Policy Rate Reduced to 5.5 Percent from 6.5 Percent
December 8, 2023 | Investopaper
Nepal Rastra Bank has released the first quarterly review of monetary policy for the current fiscal year. In response to a thorough analysis of factors impacting prevailing inflation, the central bank has opted to decrease various interest rates.
Accordingly, the bank rate for bank loans to the private sector has been reduced from 7.5 to 7 percent, the policy rate has been reduced from 6.5 to 5.5 percent, and the deposit collection rate has been reduced from 4.5 to 3 percent.
At present, the external situation is improving and the central bank has reduced the rates when the inter-bank interest rate is decreasing due to accumulation of more liquidity in the banks.
When the central bank reduces the policy interest rate when there is more liquidity in the banks, it will further encourage the banks to reduce the interest rate.
However, there has been no change in the mandatory cash reserve ratio and statutory liquidity ratio. Similarly, the risk weight of real estate loans provided by banks and financial institutions and share mortgage loans of more than 5 million rupees has been reduced from 150 to 125 percent.
