“Monetary policy is the management of the expansion and contraction of the volume of money in circulation for the explicit purpose of attaining a specific objective such as full employment”. (Kent)

The objectives of monetary policy are as follows:

1. To stabilize the price level since fluctuations in prices being uncertainty and instability to the economy.
2. To increase investment for full employment.
3. To have the rapid economic growth with stability.
4. To maintain equilibrium in the balance of payment.

Current Monetary policy of Nepal (2014/15):

The monetary policy 2014/15 introduce several measures such as checking inflation‚ increasing Cash Reserve Ratio (CRR)‚ increase in paid up capital for banks and finance companies‚ increase loan loss provision etc. to strengthen and ensure the economic development of Nepal.

Following are the objectives of Monetary Policy 2014/15:

1. Maintaining price stability by managing excess liquidity.
2. Expand credit to the productive sectors.
3. Maintain financial sector stability.