- Decision
- Maintain
- Rate change
- 0 bps
- national bank rate
- 15%
The National Bank of Ethiopia’s Monetary Policy Committee kept the National Bank Rate unchanged at 15 percent, left standing facility rates and reserve requirements steady, and raised—but did not yet abolish—the annual credit-growth target to 24 percent for FY 2025/26, judging that continued disinflation requires a still-tight stance even as it cautiously transitions toward indirect policy tools. The benchmark rate has remained at 15 percent since at least March 2025. Interbank rates (13.7 percent in August) and 91-day T-bill yields (15.0 percent) continue to trade within the 15 percent ±3 pp corridor, reflecting easier liquidity while staying positive in real terms. Headline inflation slowed to 13.6 percent in August, with food prices up 12.7 percent and non-food 15.1 percent, still above the single-digit medium-term goal; broad money rose 23.1 percent and base money 70.7 percent, though the credit cap has restrained the money multiplier. High-frequency indicators signal robust output gains led by agriculture, industry and services, while the banking system remains sound despite pockets of liquidity strain. A buoyant external sector—underpinned by strong coffee and gold exports, higher remittances and a current-account surplus—has boosted foreign-exchange inflows and reserve money. The Committee cited slightly improved global growth and easing global inflation but flagged potential tariff-related price pressures. It affirmed readiness to deploy policy rate moves, open-market operations, FX intervention and reserve-requirement changes as needed, and will revisit the credit ceiling at its December 2025 meeting.
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.