National Bank of Ethiopia Maintains Tight Monetary Policy, Adjusts Credit Growth Target
Ethiomonitor -Addis Ababa
September 30, 2025
The National Bank of Ethiopia (NBE) held its fourth Monetary Policy Committee (MPC) meeting of 2025 on September 25, reaffirming its commitment to price stability while supporting sustainable economic growth.
During the meeting, the Committee reviewed recent economic developments, including inflation trends, monetary aggregates, banking sector performance, fiscal discipline, and external sector progress.
The Committee noted that Ethiopia’s annual inflation in August 2025 fell to 13.6 percent, driven by tight monetary policies, improved agricultural output, and adjustments to key administered prices.
Food inflation declined to 12.7 percent, while non-food inflation slightly increased to 15.1 percent due to exchange rate effects.
Month-on-month inflation moderated to 1.1 percent, signaling easing price pressures.
Economic activity continued to expand, supported by strong performance in agriculture, industry, exports—particularly coffee and gold—and services such as air transport and tourism.
Monetary aggregates showed accelerated growth, with broad money and base money rising by 23.1 percent and 70.7 percent, respectively, while domestic credit increased by 14 percent.
Interest rates and liquidity conditions improved, and the banking sector remained stable with low non-performing loans, despite some liquidity pressures in certain segments.
The MPC decided to maintain the National Bank Rate at 15 percent and retain existing rates for the Standing Deposit Facility, Standing Lending Facility, and reserve requirements.
It also raised the credit growth target for FY 2025/26 from 18 percent to 24 percent, cautioning that full removal of the credit ceiling would be premature.
The Committee emphasized continued use of market-based monetary tools to safeguard financial stability and reduce inflation further.
The next MPC meeting is scheduled for December 2025
