Kathmandu — Nepal Rastra Bank cut its policy repo rate by 50 basis points to 5.5 percent on Thursday, its third reduction this year, after headline inflation slowed to 4.1 percent in the year to mid-September, the lowest reading since 2023.
Governor Dipendra Bahadur Thapa told reporters the central bank was "creating room for productive lending" after two years of tight monetary policy aimed at cooling import-driven inflation. Commercial banks are expected to pass on lower lending rates to consumers and businesses within the next billing cycle.
The rate cut lifted the Nepal Stock Exchange index by 1.8 percent in Thursday's session, led by banking and hydropower counters. Private-sector economists welcomed the move but urged the central bank to keep a close watch on remittance-driven liquidity, which has repeatedly fuelled asset-price bubbles in the past.