The National Bank of Ethiopia (NBE) has maintained the 15% benchmark rate to temper inflation and anchor exchange rate expectations at its second Monetary Policy Committee (MPC) meeting.
At its inaugural meeting last December, the committee maintained the rate for the same reasons, as headline inflation at the time was 16.9%.According to the MPC, the tight monetary policy stance and improvements in agricultural production have helped ease inflation, which eased to 15% in February.As the shift to an interest rate-based monetary policy regime is still in progress, the MPC also kept the 18% cap on annual credit growth.
“The Committee noted that the February 2025 inflation rate of 15% marks a welcome decline since the last MPC meeting of December 2024,” the NBE said in a statement.
“While the ongoing progress in reducing inflation is encouraging, the committee noted that the inflation rate remains above the intended target of reaching single-digit inflation over the medium term,” it added.
Ethiopia’s inflation has been a major issue for years. In 2024, the country embarked on broad macroeconomic reforms, including allowing a flexible exchange rate. The NBE set the key rate at 15% in July and introduced facilities for overnight lending and overnight deposit to help banks manage liquidity.
Ethiopia’s inflation will remain elevated until 2028/29, more than two-decades after the 2005 elections triggered hyperinflation, according to IMF projections.