The National Bank of Ethiopia has maintained its policy rate at 15 percent, reinforcing a tight monetary stance to manage rapidly expanding credit and ensure price stability. The Monetary Policy Committee (MPC) approved measures including a rise in the monthly reserve requirement to 10 percent, while retaining the existing 24 percent credit cap to control liquidity growth in the banking system.

Monetary conditions showed marked acceleration. Broad money grew 38.8 percent year-on-year by November 2025, while base money rose 67.3 percent. Private sector lending surged 44.5 percent, exceeding regulatory limits.

The MPC also approved the removal of the minimum deposit rate, allowing banks and depositors to negotiate terms freely. The NBE said the measure aims to enhance the transmission of policy rates through the financial system. Market interest rates remained positive in real terms, with 91-day Treasury bills yielding 16.2 percent and the 7-day interbank rate at 17.3 percent.

Inflation showed continued moderation. Headline inflation fell to 10.9 percent in November 2025, while food inflation eased to 10.6 percent from 18.5 percent a year earlier. Non-food inflation declined to 11.4 percent, and month-on-month deflation of 1.4 percent indicated sustained easing of price pressures. The MPC attributed the trend to tighter monetary conditions, improved agricultural production, and measured adjustments in administered prices.

Ethiopia’s economy maintained robust growth, with real GDP rising 9.2 percent in FY 2024/25, surpassing the eight-year average of 7.5 percent. Industrial activity, particularly in gold mining, contributed 1.0 percentage point to GDP, up from 0.1 the previous year, while services maintained steady expansion and agriculture recorded modest gains. Some exports, including oilseeds, pulses, and flowers, declined, alongside lower imports of petroleum and raw materials.

Fiscal prudence and a resilient external sector supported monetary stability. Ethiopia maintained a current account surplus in the first five months of FY 2024/25, driven by strong exports of gold and coffee, rising remittances, and capital inflows. Government borrowing from the NBE remained restrained, enabling the central bank to continue its tight policy stance.

The MPC stated that it will maintain its current monetary framework until single-digit inflation is achieved and will adjust policy instruments as needed. The next committee meeting is scheduled for March 2026, with flexibility to convene earlier if warranted.