The National Bank of Ethiopia’s Monetary Policy Committee has kept the benchmark rate at 15% in its fourth meeting in September 2025, while raising the credit growth ceiling to 24%.
- •The committee said the move balances easing inflation with financial stability.
- •It also highlighted stronger external accounts, reduced fiscal reliance on central bank financing, and progress in shifting toward market-based policy tools.
- •In December 2024, the inaugural meeting introduced the cap, while the March and July 2025 meetings retained it.
Inflation and Growth Trends
Inflation slowed to 13.6% in August from 18.8% a year earlier.
- •Food prices rose 12.7%, while non-food inflation edged to 15.1% on currency effects.
- •The MPC said the decline reflects tight policy, stronger farm output, and price adjustments.
- •Month-on-month inflation eased to 1.1%, reinforcing the view that disinflation is taking hold though not yet at desired single-digit levels.
Growth remained firm, driven by agriculture, industry, and services such as air transport and tourism.
- •Coffee and gold exports and higher remittances kept the balance of payments in surplus.
- •Imports of semi-finished and consumer goods fell, reflecting tighter demand conditions.
Banks stayed stable though high loan-to-deposit ratios weighed on liquidity, prompting use of the new standing lending facility and interbank market.
Monetary Policy Decisions
Broad money grew 23.1% year-on-year and base money 70.7% by August. Credit rose 14%, and loans 5.4% since June.
The MPC warned that reserve money growth, tied to foreign exchange inflows, must be managed to contain inflation risks. The committee stressed that it will continue to rely on policy rate signals, open market operations, FX interventions, and reserve requirement changes.
“The credit growth ceiling is increased to 24% for FY 2025/26,” the statement read. The committee added, “Premature lifting of the ceiling could undermine disinflation gains.”
