NRB’s Third Quarter Monetary Policy Review: Risk Weight on Share Mortgage Loans Reduced From 125% to 100%, Foreign Reserves Strengthen

Nepal Rastra Bank (NRB) has unveiled the third quarterly review of the Monetary Policy for the current fiscal year 2081/82. A key highlight of the review is the reduction in the risk weight for share mortgage loans from 125% to 100%, a move expected to ease credit flow in the stock market.

While last year’s third quarterly review was published on Jestha 4, this year's review was delayed, which the central bank attributed to the time taken in appointing a new governor.

NRB stated that the monetary policy has been guided by the objective of avoiding inflationary pressure through monetary expansion. With a target to limit inflation around 5%, the average consumer inflation during the first nine months of the fiscal year stood at 4.57%, successfully remaining within the target range.

With a notable decline in imports and surplus in the current and balance of payments accounts, the country’s foreign exchange reserves have increased significantly. While NRB’s policy aims to maintain reserves sufficient to cover at least seven months of goods and services imports, the current reserves are enough to cover approximately 14.2 months of imports, according to the data presented in the review.

The review also touches upon global economic developments. The International Monetary Fund (IMF) has projected global economic growth to slow to 2.8% in 2025, down from 3.3% in 2024. This downgrade is attributed to rising protectionist trade policies and increased tariffs in developed economies.

According to the IMF:

• Advanced Economies: Growth is expected to slow from 1.8% in 2024 to 1.4% in 2025

• Emerging and Developing Economies: Projected to shrink from 4.3% in 2024 to 3.7% in 2025

• India: Growth expected to decline slightly from 6.5% in 2024 to 6.2% in 2025

• China: Growth forecast to drop from 5.0% in 2024 to 4.0% in 2025

NRB’s review signals a continued focus on internal price stability, financial access, and an investment-friendly environment while remaining cautious of global uncertainties.