According to Nepal’s central bank, rates will remain stable as the election process continues.

While waiting for the results of the national elections, Nepal’s central bank decided late Sunday to keep its benchmark interest rates at 8.5% and expressed hope that the new government would push through the reforms needed to boost economic growth.

As of now, results showed that the opposition Nepal Communist Unified Marxist Leninist (UML) party had won 42 of the country’s 53 parliamentary seats, leaving Prime Minister Sher Bahadur Deuba’s Nepali Congress with 53. However, only 158 of the 275 seats have had their findings announced thus far.

The results of the elections held on November 20 for the national parliament and seven state assemblies won’t be finalized for a few more days. Analysts predicted that the Nepali Congress would end up being the most significant party.

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Following the announcement of its monetary policy for the first quarter of the current fiscal year, which started in mid-July, Nepal Rastra Bank (NRB) stated: “It is expected that the economic activities will get a boost as the new government will bring administrative and economic reform programs.”

The policy rate was maintained by the NRB at 8.5%, where it has remained since being raised from 7.0% in July.

After reaching a more than six-year high of 8.64% in September, annual consumer price inflation slowed to 8.5% in mid-October. For the fiscal year 2022–2023, which started in the middle of July, the central bank set an inflation target of 7%.

The central bank decreased the difference between commercial banks’ lending ranges and deposit rates from 4.4 percentage points to 4.0 percentage points. From 5.0 percentage points, the spread for other financial institutions was lowered to 4.6 percentage points.

Analysts say that a drop in spreads should lower interest rates for both consumers and businesses and cut bank profits at the same time.

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During the election season, the major political parties promised to lower interest rates after businesses said that high rates made it hard for them to invest.