NRB cut the bank rate by 0.5 percent point and the policy rate by 1 percent.
“Considering various aspects that can affect current inflation, balance of trade and growth rate of banks loans towards private sector, the bank rate has been declined from 7.5 percent to 7 percent, policy rate from 6.5 percent to 5.5 percent and deposit collection bid rate from 4.5 percent to 3.0 percent,” writes NRB in the first quarter review of Monetary Policy.
The central bank cut down the rates due to declining inter bank interest rates and improve in external sector.
Although the loan extension of BFIs have improved in the current FY compared to the last FY, the loan extension remains negligible compared to the collected deposits.
The move will encourage BFIs to cut down their interest rates.
