National Bank of Ethiopia Holds Policy Rate at 15% to Curb Inflation and Boost Stability











Addis Ababa, December 31, 2024The Monetary Policy Committee (MPC) of the National Bank of Ethiopia (NBE) held its inaugural meeting to evaluate the nation’s macroeconomic landscape and chart an effective monetary policy course. In a period marked by fiscal and global economic challenges, the MPC’s deliberations and subsequent decisions aim to balance price stability and economic growth.

Key Developments and Economic Insights:

Inflation:Year-on-year inflation dropped to a five-year low of 16.9% in November 2024, showing a consistent downward trajectory. Food inflation remains elevated at 18.5%, but core inflation has improved, reflecting exchange rate reforms and effective monetary tightening measures. The latest monthly inflation rate decreased by -0.8% in November 2024.

Economic Growth:Real GDP growth surged by 8.1% in the fiscal year 2023–24, supported by a record harvest, robust industrial output, and expanding service activities, particularly in tourism and air transport. The positive growth outlook continues for the 2024–25 fiscal year.

Monetary Developments:Despite a sharp reduction in key monetary aggregates relative to nominal GDP, broad money and base money grew by 20% and 17%, respectively. The MPC recommends gradually reversing the real decline in monetary aggregates to support medium-term growth.

Banking and Financial Sector:The banking system remains sound, despite liquidity strains in private banks, reflected in high loan-to-deposit ratios. New interbank money market and standing lending facilities at the NBE have eased liquidity challenges.

External Sector:The July 2024 exchange rate reforms bolstered exports, remittances, and private capital inflows, boosting Ethiopia’s foreign exchange reserves to record highs. These developments reflect growing confidence in the country’s monetary policies.

Global Context:Ethiopia’s economy has shown resilience amid global commodity price fluctuations and trade slowdowns, highlighting the need for greater trade integration to enhance external stability.

Monetary Policy Decisions:

The MPC announced the following key actions to anchor inflation expectations and support economic stability:

Policy Rate: The National Bank Policy Rate remains at 15%, with a focus on reducing inflationary pressure and stabilizing exchange rates.

Credit Growth: To transition toward interest-based policies, credit growth will be adjusted moderately, increasing from 14% to 18%.

Standing Facilities: Existing rates for deposit and lending facilities remain unchanged to provide stability in the financial sector.

Future Outlook:

The MPC emphasized its commitment to monitoring inflation and economic trends in the coming months. The next policy meeting is scheduled for March 25, 2025, where further adjustments may be made based on emerging data.

This inaugural meeting and its resulting policies reflect the National Bank’s strategic approach to fostering sustainable economic growth while addressing inflationary challenges and external vulnerabilities.

For further details, visit nbe.gov.et.











1 COMMENT

Ittu Aba Farda







January 1, 2025 At 6:33 am













Meanwhile, I would like to take a moment to wish you all of my very dear countrymen/women from every country in The Horn of Africa A Happy and Rewarding Year in 2025 and years beyond that. It is also my Best Wishes for that gem of a region that produced us all that will somehow find the wherewithal to be at peace with itself in the coming year. Let’s all monger peace and stability for those innocent besieged people. Enough with finding solutions to issues with guns. Enough, enough, enough! Insha’Allah!!!

Meanwhile, I would like to take a moment to wish you all of my very dear countrymen/women from every country in The Horn of Africa A Happy and Rewarding Year in 2025 and years beyond that. It is also my Best Wishes for that gem of a region that produced us all that will somehow find the wherewithal to be at peace with itself in the coming year. Let’s all monger peace and stability for those innocent besieged people. Enough with finding solutions to issues with guns. Enough, enough, enough! Insha’Allah!!!

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