- Decision
- Maintain
- Rate change
- 0 bps
- national bank rate
- 15%
The National Bank of Ethiopia’s Monetary Policy Committee kept the National Bank Rate at 15 percent at its 22 December meeting, judging that a “tight stance” remains necessary as headline inflation, though easing to 10.9 percent in November from 13.6 percent in August, is still above the single-digit goal amid brisk money and credit expansion. The policy rate has been unchanged at 15 percent since at least March 2025. The MPC left standing-facility rates and a 24 percent y/y credit-growth ceiling in place, but moved to absorb excess liquidity by raising the reserve-requirement ratio to a 10 percent monthly average (5 percent daily) with a three-to-six-month transition and scrapped the administered minimum saving rate to strengthen policy-rate transmission. Broad money and base money rose 38.8 percent and 67.3 percent y/y in November, while bank credit grew 44.5 percent; interbank seven-day rates were 17.3 percent, inside the 15 percent ±3 ppt corridor, and 91-day T-bill yields reached 16.2 percent. Real GDP expanded 9.2 percent in FY 2024/25, underpinned by mining, services and agriculture, though some export and import categories softened. Robust gold and coffee exports, higher remittances and capital inflows kept the current account and overall balance of payments in surplus, lifting reserves to a record high. Against a backdrop of modest global growth deceleration and easing world inflation, the Committee reaffirmed its readiness to deploy additional tools and will review the stance at its next meeting by end-March 2026 or earlier if conditions warrant.
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.