NRB set to unveil Monetary Policy today, Focus expected on credit expansion and flexible policy stance

KATHMANDU: The Nepal Rastra Bank (NRB) is set to unveil its Monetary Policy for Fiscal Year 2083/84 (2026/27) later today, with expectations that the central bank will continue its accommodative policy stance while prioritizing credit expansion to support Nepal’s economic recovery.

According to sources at the central bank, the monetary policy is scheduled to be released this afternoon following the completion of a series of high-level meetings. The NRB’s Management Committee convened at 9:30 a.m. on Wednesday to finalize the policy document, after which the Board of Directors is expected to endorse it before its official publication.

The annual monetary policy is one of Nepal’s most closely watched economic policy documents as it outlines the central bank’s strategic direction for the fiscal year, including monetary operations, liquidity management, interest rate corridor arrangements, inflation management, and measures aimed at maintaining financial stability.

Unlike previous years, however, the central bank is not expected to introduce major regulatory revisions through this year’s monetary policy. Sources indicate that prudential regulations governing banks and financial institutions will largely remain unchanged, suggesting that the policy will focus more on macroeconomic management than on regulatory restructuring.

The policy comes at a time when Nepal’s economy is gradually recovering from a prolonged period of weak private sector demand. Although credit growth has remained below expectations over the past two years, the banking system currently has ample liquidity, while interest rates have eased significantly compared to previous years.

Officials believe these conditions provide room for the central bank to continue encouraging lending without creating excessive inflationary pressures.

Internationally, geopolitical tensions in the Middle East had earlier raised concerns over higher global commodity and energy prices. However, NRB’s assessment suggests that while those developments created some inflationary risks, overall price pressures remain manageable. With the conflict showing signs of easing and domestic inflation remaining within the central bank’s target range, policymakers see limited risk of a sharp inflation surge in the coming fiscal year.

Against this backdrop, the monetary policy is expected to prioritize greater credit flow to the private sector, particularly towards productive industries, businesses, agriculture, infrastructure, and small and medium enterprises. By supporting increased lending, the central bank aims to stimulate investment, revive business confidence, generate employment, and accelerate overall economic activity.

Economists have also been closely watching whether the policy introduces additional incentives for sectors such as housing, manufacturing, tourism, renewable energy, and export-oriented industries, all of which have been seeking easier access to financing.

The policy will also provide guidance on key monetary instruments, including liquidity management operations, refinancing facilities, and the interest rate corridor framework, which plays an important role in influencing market interest rates and overall financial conditions.

Today’s announcement will mark the second monetary policy to be presented under NRB Governor Dr. Biswo Nath Paudel, who assumed office with a commitment to supporting sustainable economic growth while maintaining financial sector stability.

The monetary policy is expected to strike a careful balance between promoting economic expansion through increased lending and preserving macroeconomic stability, making it one of the most significant policy announcements for Nepal’s banking sector, businesses, investors, and the broader economy during the current fiscal year.