Nepal Rastra Bank (NRB) has vowed to boost the flexibility of the current fiscal year's monetary policy as long as the effect of Covid-19 persists.
In a press conference held after the quarterly review of the monetary policy on Tuesday, Governor Maha Prasad Adhikari said, "Monetary policy and mechanism will remain flexible as long as the corona crisis continues." Such continuity has been based on the government's target for economic growth and the overall condition of the economy, the governor explained.
Governor Adhikari further added that the liquidity of banks and other financial institutions has been satisfactory and the confidence of investors has been increasing. Although the decrease in interest rates for credit has helped investors, the fall of interest rates for cash deposits has troubled people dependent on it as their source of income. NRB has made important arrangements to address the problem of those people, according to Adhikari.
The governor said that the bank has set an action plan regarding interest rates and has been working to widen the scope of monetary policy, promote national production, and boost entrepreneurship among the people.
Governor Adhikari explained that the quarterly review of monetary policy was conducted to aid the government's target of economic growth. "NRB has been working to improve the performance of banks and financial institutions and avoid any potential problems facing the economy," he added.
"Important arrangements have been made to envision the current scenario into the action plan formulated in the monetary policy to avoid additional stress on stability of price and external sectors," said Adhikari.
The review of the first quarter has shown the need for giving continuity to the action plans of the current monetary policy along with the support for economic growth to facilitate the availability of resources available in the banks and other financial institutions, according to Adhikari.
Speaking at the conference, Governor Adhikari said, "NRB has not adopted regulatory measures for fiscal adjustment until now. The regulatory and monitoring role of NRB will be boosted to avoid dangers to financial instability."
