Kathmandu. Interest rates continue to rise in the banking sector. All sectors should be prepared to face interest rate hike. At present, it is necessary to increase the policy interest rate further. The current situation is demanding an increase in interest rates. Lack of liquidity in the system affected interest rates. Even so, the interest rate has not gone much higher than before. However, the situation is demanding that the interest rate should go higher than it is now.

During the mid-term review of monetary policy, we raised the policy interest rate by 2 percent. However, if the balance of payments deficit continues to rise like this, it will not be enough! There may be a need to think more about raising policy interest rates.

An interest rate hike is a tool to solve the problems seen in the economy and the external sector. Our main tool is the policy interest rate. For the time being, we have used some temporary tools like banning imports and keeping cash margin in LCs. These tools are for a limited time, not forever. The main monetary tool we use is the policy interest rate.

There are signs of improvement in the economy. Although other economic indices have been good for the past two years, economic growth has not been as expected. Although the post-Covid economy is expected to boost economic growth, it has not met its target. The economic growth rate has reached 5.8 percent in recent days despite external pressure.