Central Bank signals at tightening monetary policy amid inflationary and forex pressure

KATHMANDU: The Nepal Rastra Bank (NRB) has indicated towards tightening the Monetary Policy further. In its third quarterly review, the NRB it will continue to tighten monetary instruments to address the current economic woes.

Lately, the bank and financial institutions is reeling under liquidity pressure and loan disbursement from banks have come down. Persistent liquidity crisis along with declining foreign exchange reserves have been creating double pressure on the economy. Against this backdrop, NRB has stated provisions made through the mid-term review of the Monetary Policy will be continued.

“As inflation and the foreign exchange reserves are under pressure, monetary policies will be kept tight. As the pressure on prices and external sector stability persists, the policy direction taken in the mid-term review of monetary policy has been continued, ” states the quarterly review report of the central bank.

Similarly, the quarterly review of the Monetary Policy states that emphasis will be given to increase the flow of financial instruments in productive sector, small and medium enterprises, growth of domestic production and export promotion keeping in view the price and external sector stability.