KATHMANDU: In its first quarterly review of the monetary policy for the fiscal year 2081/82, Nepal Rastra Bank (NRB) affirmed that the current policy framework will remain unchanged. The report highlights the bank's cautious and adaptable handling of the country's monetary situation. To develop this plan, important economic factors such as inflation trends, foreign exchange reserves, and overall economic circumstances are assessed.

One of monetary policy's main objectives is to keep inflation at or below the 5.0% mark. For the first quarter of the fiscal year, the average consumer inflation rate was 4.26%. However, by Ashwin 2081, annual point-to-point inflation had risen to 4.82%, primarily as a result of a 7.18% increase in the food and beverage sector and a 3.49% increase in non-food products and services.

The NRB aims to maintain sufficient foreign exchange reserves to pay for imported products and services for a minimum of seven months. This goal was easily accomplished as of Ashwin 2081 because the bank's reserves were much higher than anticipated and could sustain imports for 14.6 months.

The interest-rate corridor was also modified by the NRB. The policy rate decreased from 5.5% to 5.0%, and the bank rate decreased from 7.0% to 6.5%. The NRB's efforts to ensure liquidity, promote economic expansion, and maintain price stability are reflected in these actions.

In the first quarter, banks and financial institutions (BFIs) had a weighted average interbank rate of 3.00 percent. This rate is a crucial indicator of the cost of borrowing between institutions and is constantly monitored to assess liquidity in the financial sector.

The NRB had forecast a 12.5% increase in private sector credit and a 12.0% growth in the broad money supply in its monetary policy aims for the year. By Ashwin 2081, private sector credit had increased by 6.2% over the same period the year before, while the broad money supply had increased by 13.3%, exceeding the goal.

Major financial sector metrics show that as of Ashwin 2081, the broad money supply grew by 13.3%, a slight decrease from the 13.9% increase observed during the same period the previous year. This points to a consistent increase in the money supply, which is essential for maintaining economic liquidity.

As of Ashwin 2081, private sector credit also expanded well, increasing 6.0% yearly compared to 4.8% the previous year. This suggests that both consumers and businesses continue to have a high demand for loans, which is good for the economy.

Deposits in banks and other financial institutions have increased significantly, growing about 12.8% a year as of Ashwin 2081. Despite a little decrease from the 14.9% increase seen during the same period last year, there are still significant deposits flowing into the financial system.

The NRB's quarterly evaluation of its monetary policy for the fiscal year 2081/82 shows that, despite the economy being closely watched, it is maintaining stability by adopting a flexible posture. The assessment states that the NRB will play a key role in advancing Nepal's overall economic success by monitoring inflation targets, interest rates, and the growth of the banking industry.