- Decision
- Maintain
- Rate change
- 0 bps
- national bank rate
- 15%
Ethiopia’s Monetary Policy Committee of the National Bank of Ethiopia (NBE) kept the National Bank Rate unchanged at 15 percent on 25 March 2025, judging that a still-tight stance is needed to push February’s headline inflation—now 15 percent, with food at 14.6 percent and non-food at 15.6 percent—toward the single-digit medium-term target as month-on-month rises moderated to 0.5 percent for a fourth month. The Committee also maintained the 18 percent annual credit-growth cap, left unchanged the parameters of its 15 percent ±3 percentage-point interest-rate corridor, and retained existing Standing Deposit and Lending Facility rates and reserve requirements. Broad and base money grew 22.8 percent and 42.0 percent, respectively, amid stronger economic activity signalled by the Composite Index of Economic Activity and expectations of a record ‘meher’ harvest, while interbank rates averaged 16.7 percent and T-bill yields reached 17.7 percent, both now positive in real terms. A prudent fiscal stance with no central-bank deficit financing, a first-half current-account surplus underpinned by higher exports, remittances and post-July 2024 capital inflows, and rising FX reserves support the policy setting. The MPC cited steady global growth, easing oil prices and high coffee and gold prices but flagged trade uncertainty from geopolitical tensions. Policy will remain data-dependent, with the next MPC review scheduled for end-June 2025.
Rate evolution
Across the period covered, the National Bank of Ethiopia kept the National Bank Rate unchanged at 15%, maintaining a tight disinflationary stance and later reinforcing it with non-rate measures rather than a rate move. The hold reflected continued progress on inflation, which the Committee attributed to tight monetary policy, improved agricultural production and gradual administered-price adjustment, even as inflation remained above the single-digit objective, while robust activity, prudent fiscal policy and external accounts supported the stance. In September, the Board held while raising the credit growth target to 24%, stressing careful calibration to avoid loosening the stance or creating financial-stability risks. By December, despite further disinflation and month-on-month deflation, the rate stayed at 15% but the tone turned more guarded as money and credit growth accelerated, excess liquidity from gold-related foreign-exchange accumulation risked unintended expansionary effects, and policy-rate transmission was still weak, prompting retention of the 24% credit cap and a higher reserve requirement, with the Committee saying tight policy should remain in place and, if needed, be strengthened until single-digit inflation is secured amid uncertainty and rising trade barriers.