Professor Dr. Bishwanath Paudel, the Governor of Nepal Rastra Bank, emphasized that expanding loans through monetary policy leads to an increase in asset prices. He stated that credit and investment expansion via monetary policy would yield effective results only when supported by a definite fiscal policy framework. Governor Paudel remarked, “The primary mandate of monetary policy is economic stability,” adding that the government is actively working to control inflation. Kathmandu, 32 Ashar.
Governor Paudel clarified that attempting to manage liquidity by expanding loans solely through monetary policy results merely in higher asset valuations. He stressed that loan investment expansion should be based on clear fiscal policy guidelines to ensure smoother management. Paudel also highlighted the importance of engaging in comprehensive discussions on monetary policy rather than neglecting key sectors such as the stock market and real estate.
During an event organized by the Former Planning Forum Nepal on Thursday, Governor Paudel highlighted significant differences between the budget and monetary policy. He pointed out, “Inflation arises from international factors and cannot be entirely controlled, but efforts can be made.” He noted that structural reforms incorporated into the upcoming fiscal year’s monetary policy have addressed issues of market manipulation in the stock market.
Governor Paudel stated that the main focus of monetary policy is on policy interest rates, which facilitate liquidity management; however, this requires reliance on fiscal policy. He added, “Expanding credit solely through monetary policy results only in an increase in asset prices.” Furthermore, he informed that there is currently sufficient liquidity available in the financial system.
