NRB Economic Indicators 2025/26: Base Rate Down to 5.72%, Liquidity Improves

The Nepal Rastra Bank (NRB), in its Mid-September 2025/26 Macroeconomic and Financial Report, has highlighted a period of renewed monetary stability and ample liquidity in Nepal’s banking system. The data reveals that the average base rate of commercial banks has fallen sharply to 5.72%, down from 7.48% in the same period last year, indicating a sustained easing of financial conditions across the economy.

The decline in the base rate — a key benchmark for determining lending rates — reflects a combination of reduced inflation, strong deposit growth, and stable monetary management by NRB. The lending rate also dropped to 7.66%, while the deposit rate eased to 3.96%, showcasing a well-balanced credit environment. As a result, businesses and consumers are now able to access credit at significantly lower costs compared to the high-interest regime of previous years.

The improvement in liquidity conditions has been driven by the consistent expansion of the money supply and rising deposits in the banking system. Broad Money (M2) grew by 12.4%, while Reserve Money expanded by 10.1%, ensuring adequate liquidity for banks to meet credit demands. Total deposits reached Rs. 7.29 trillion, a 12% increaseyear-on-year, while private-sector credit climbed to Rs. 5.54 trillion, marking a 7.3% rise. These figures suggest that financial institutions have ample resources to finance productive sectors, including trade, manufacturing, and services.

At the same time, the interbank rate among commercial banks averaged 2.74%, indicating steady short-term liquidity flow within the banking system. Treasury bill yields also remained subdued, with the 91-day T-bill rate at 2.13% and the 364-day T-bill at 2.60%, reflecting low borrowing costs for both government and private institutions.

NRB’s data shows that the overall macroeconomic environment remains favorable, with inflation dropping to just 1.87% — one of the lowest in years — and foreign exchange reserves crossing Rs. 2.88 trillion (USD 20.41 billion). The current account and balance of payments both recorded surpluses, further reinforcing liquidity stability in the economy.

Economists view the easing base rate as a positive signal for credit expansion, business investment, and capital market performance. The NEPSE Index has already shown signs of improvement, closing at 2,672 points, with market capitalization reaching 73.1% of GDP. However, NRB has cautioned banks to ensure that liquidity is directed toward productive sectors rather than speculative lending, to sustain long-term economic stability.