Inflation was recorded at 9.8 percent in the first half of 2012/13.[break]
Unveiling the mid-term review of the monetary policy on Wednesday, the central bank expected inflation to cool in the coming months.
“Though we failed to contain inflation within the targeted limit in the first half of the current fiscal year, we are hopeful that it will cool down in the coming months,” NRB Governor Dr Yuba Raj Khatiwada said, unveiling the report.
Khatiwada also informed that NRB has initiated homework to revise the system to determine weightage of commodities so as to make inflation calculation more accurate in coming days.
He also clarified that the economic growth projection has been revised down to 4.1 percent from target of 5.5 percent due to weak capital spending in the absence of the full-fledged budget, nominal 0.7 percent growth in farm sector and 5.4 percent growth in non-farm sector amid prolonged load-shedding.
“Insufficient monsoon, political instability, power deficit and weak capital expenditure are set to pull economic growth downward this fiscal season,” added Khatiwada.
The review report also shows country´s balance of payment (BOP) dropped to Rs 6.07 billion during the first six months of the current fiscal year, from Rs 66.72 billion recorded during the same period last year.
The central bank has announced to expand the system of ´base rate´ of interest, which has been implemented in commercial banks, also to development banks and finance companies.
Through the monetary policy, the central bank had made it mandatory for all commercial banks to make public the ´base rate´ every month. Under the provision, BFIs will have to determine their interest rates on the basis of the base rate, a system which is expected to narrow down the gap in interest between deposit and credit.
Khatiwada also informed that NRB was pushing ahead with the plan to introduce Financial Sector Development Strategy in an effort to ´develop sustainable, healthy and inclusive financial system´ in the country.
In a move to promote renewable energy, the central bank is also planning to revise existing micro credit limit up to Rs 60,000 per household for installing solar system or bio-gas plant
NRB expects the deposit mobilization by BFIs to slow down to 13.1 percent from projected 15.1 percent during the current fiscal year.
The number of goods that could be imported from India paying US Dollar has been increased to 161. Similarly, NRB issued Rs 290 million and US$ 2.6 to importers for import refinancing during the review period.
The NRB has also stated that under privileged sector credit issued by commercial banks, development banks and finance companies has reached 3.9 percent, 3.5 percent and 2.7 percent, respectively of their total credit until mid-January.
The central bank has instructed all commercial banks, development banks and finance companies to lend up to 4 percent, 3.5 percent and 3 percent of their total lending, respectively to under-privileged sector.
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