NRB should look after controlling higher inflation rather than achieving high economic growth

KATHMANDU, June 16: Former governors of Nepal Rastra Bank (NRB) have urged the central bank to enforce prudent measures through the monetary policy for the next fiscal year, to boost healthy operation of the country’s financial market along with addressing the ongoing recession.

Speaking at a discussion program organized by the Management Association of Nepal on Thursday, former NRB Governor Tilak Rawal said the central bank needs to take a midway line between the contractionary and expansionary monetary policy. “The monetary policy has to address achieving the target of economic growth and soaring inflation rate by analyzing fundamentals of the annual budget.”  

Rawal underlined that the monetary policy should have to maintain balance between the external sector and internal sector of the economy. “The related monetary instruments should be mobilized. If there is no such policy instrument, the NRB has to develop a new one,” he added.

Former NRB Governor Ganesh Thapa said the NRB has to adopt effective policy to minimize the interest rates. “The central bank has to take measures to raise the demand for loans, while it has to identify the problematic sector to provide them with special packages.

Similarly, former NRB Governor Dipendra Purush Dhakal said the NRB needs to look for controlling the cartel of the banks’ interest rates. “The interest rates should be let free to be determined by the market, rather than enforcing a cartel system.”

Economist Yubaraj Khatiwada said the NRB should not just focus on a particular sector, rather it should look for stabilizing the economy as a whole while formulating monetary policy. “We should be accountable only in an area that is under our jurisdiction,” he said.

Khatiwada said the central bank should not make the policy just to boost the share market. “It is the job of the Securities Board of Nepal, not the NRB, to regulate the stock exchange market,” Khatiwada said. “As the economy is underutilized, NRB should not be worried about achieving high growth, but needs to show more concern on the high consumer price index.”  

Khatiwada suggested the NRB maintain a spread rate of four percent. “The spread interest rate is sufficient for the banks to earn profits of 10/12 percent per annum,” he added.

Regulation of microfinance, not to undertake responsibility of cooperatives, reduction in interest rates and not raising the paid-up capital of the banks and flexibility to the businessmen to take out shares from the banks are among the advice that Khatiwada gave to the central bank.    

Monetary policy will keep controlling inflation in the topmost priority:  NRB Governor Adhikari

Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari has urged the stakeholders not to have high hopes to get excessive favor from the monetary policy 2023/24.

“It will be an over expectation of the firms to expect all the facilities provided to them during the odd hours of the COVID-19 pandemic,” Adhikari said. “Although the monetary policy will follow the guidelines of the annual budget for the fiscal year 2022/23, the central bank will focus more to controlling inflation rates than achieving high economic growth rate,” he added.

 
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