Governor States: Loan Expansion Without Financial Policy Support Only Increases Asset Prices

Professor Dr. Bishwanath Poudel, Governor of Nepal Rastra Bank, has stated that expanding loans through monetary policy leads to an increase in asset prices. He emphasized that effective results from loan investment expansion through monetary policy can only be achieved with a definite basis in financial policy. Governor Poudel stated, “The primary mandate of monetary policy is economic stability,” and noted that the government is striving to control inflation. Kathmandu, 32 Asar.

Governor Poudel highlighted that attempting to manage liquidity by expanding loans through monetary policy alone only drives up asset prices. He asserted that loan investment expansion must be based on well-defined financial policies, which will facilitate better management. He also stressed that issues related to the stock market and real estate should not be overlooked without adequate discussion of monetary policy.

Speaking at a program organized by Former Planning Forum Nepal on Thursday, Governor Poudel presented data showing significant differences between the budget and monetary policy. He stated, “Inflation arises from international factors and cannot be completely controlled, but efforts can be made.” According to him, structural changes in the upcoming fiscal year’s monetary policy have resolved the problem of manipulation in the stock market.

Governor Poudel explained that the main focus of monetary policy is on policy interest rates and that liquidity management is achieved through this, but it must rely on financial policy. He added, “When credit facilitation is done solely through monetary policy, it only increases asset prices.” He further informed that there is currently sufficient liquidity available in the financial system.