NRB’s 2026/27 monetary policy: An accommodative bet on reform amid structural fragility
Summary
Nepal Rastra Bank maintains its policy rate corridor amid fiscal expansion, reflecting coordinated macroeconomic efforts despite structural challenges and external vulnerabilities.
Key Points
- Nepal Rastra Bank holds policy rates steady at 4.25 percent for 2026/27 amid continued negative output gap and structural constraints.
- Private sector credit growth remains subdued due to broken credit transmission and real estate collateral issues.
- Nepal's largest-ever fiscal budget expansion aligns with the accommodative monetary policy to stimulate demand, relying on under-executed capital expenditure for growth.
- External risks from Middle East geopolitical tensions pose inflation and remittance flow threats to Nepal's economy despite domestic reforms.
