Nepal, Dec. 1 -- Nepal's central bank on Monday reduced the policy rate from 4.50 percent to 4.25 percent in the first-quarter review of the monetary policy, aiming to increase credit flow and revive economic activity that has struggled to gather momentum despite a surplus of liquidity in the banking system.

Citing inflation at a two-decade low, record foreign exchange reserves, and broader macroeconomic and financial-sector conditions, the Nepal Rastra Bank said it would continue the cautious and flexible monetary policy stance adopted for the current fiscal year.

The first-quarter review, covering the period ending mid-October, introduces a series of regulatory adjustments.

According to the central bank, lowering the policy rate-whic...