The Monetary Policy Committee (MPC) of the National Bank of Ethiopia (NBE) concluded its latest meeting on Tuesday without issuing a concrete decision on the much-anticipated lifting of the credit cap, opting instead to maintain current policy settings amid rising global economic uncertainty.
In a statement released following the March 31 session, the MPC indicated that it would convene for an extraordinary meeting in less than a month to reassess the situation, driven largely by geopolitical tensions in West Asia.
The committee noted that sustaining the single-digit inflation recorded since December 2025 still requires a continued tight monetary policy stance. It reaffirmed its commitment to using all available instruments to maintain price stability, deciding to keep both the policy rate and the annual credit growth caps unchanged.
However, the MPC highlighted growing concerns over heightened global economic uncertainty fueled by the conflict in the Middle East and its potential spillover effects on the domestic economy. In response, the committee emphasized the need for more frequent reviews of key macroeconomic developments.
The committee agreed to reconvene by late April, or earlier if circumstances warrant, to evaluate whether additional policy measures are required.
Citing the International Monetary Fund’s January 2026 outlook, the MPC noted that global growth was projected at around 3.3 percent for 2026 and 3.2 percent for 2027. But it warned that this outlook is now subject to significant downside risks following a sharp oil price shock tied to escalating Middle East tensions.
“The sharp rise in energy prices is expected to dampen global growth by raising production costs, eroding real incomes, and tightening financial conditions, particularly in oil-importing economies,” the statement read. While baseline projections remain broadly intact, the committee noted that the balance of risks has shifted to the downside, with the severity of the impact depending on the duration and intensity of the conflict and the persistence of high oil prices.
On the domestic front, the MPC underscored that Ethiopia’s external position has shown resilience since the comprehensive economic reforms launched in July 2024. The country’s balance of payments registered a surplus during the first eight months of the 2025/26 fiscal year, driven by significant improvements in exports—particularly coffee and gold—along with growth in private transfers, net service trade, and capital account inflows.
