The National Bank of Ethiopia (NBE) has kept its benchmark policy rate unchanged at 16 percent, maintaining a tight monetary policy stance as inflation remains in double digits.
The decision followed the eighth regular meeting of the central bank’s Monetary Policy Committee (MPC), held on November 3, 2026. The committee reviewed recent economic developments, inflation trends, external-sector performance, and conditions in the monetary, financial and fiscal sectors.
The NBE also retained its interest rate corridor at plus or minus 300 basis points around the policy rate. The central bank said maintaining tight monetary conditions remains essential to achieving its medium-term goal of reducing inflation to single digits.
According to the MPC, recent monetary and financial conditions point to moderate looseness, while short-term inflation forecasts remain in double digits. It said this justified keeping the current policy direction unchanged.
The committee also signalled closer monitoring of commercial banks’ loan-to-deposit ratios. It warned that additional targeted reserve requirements could be introduced if rapid credit expansion threatens the inflation outlook.
The NBE said it would continue to rely on indirect monetary policy tools, particularly open market operations, to absorb excess liquidity from the financial system. The measures are intended to restrain excessive money supply and credit growth, which can add to inflationary pressure, while supporting broader macroeconomic stability.
The MPC is scheduled to meet again at the end of January 2027, though it may convene earlier if economic conditions require further policy action. The 16 percent policy rate was set in July 2026, when the NBE raised it by one percentage point while removing its annual bank credit-growth cap.
