Ethiopia central bank holds policy rate at 16 percent
The National Bank of Ethiopia maintained its benchmark rate due to persistent double-digit inflation and moderate looseness in financial conditions.
The National Bank of Ethiopia (NBE) has kept its benchmark policy rate at 16 percent, continuing a tight monetary policy. This decision was made at the Monetary Policy Committee meeting on November 3, 2026, after reviewing economic developments and inflation trends. The central bank also kept its interest rate corridor at plus or minus 300 basis points around the policy rate.
Maintaining tight monetary conditions is essential for reducing inflation to single digits, according to the NBE. Recent conditions indicate moderate looseness, with short-term inflation forecasts remaining in double digits, justifying the unchanged policy. The committee will monitor commercial banks’ loan-to-deposit ratios and may introduce targeted reserve requirements if rapid credit expansion threatens the inflation outlook.
The NBE will use indirect tools like open market operations to absorb excess liquidity and restrain money supply and credit growth. The current 16 percent policy rate was set in July 2026 when it was raised by one percentage point. The MPC is scheduled to meet again at the end of January 2027, but could convene earlier if economic conditions necessitate.
Why it mattersEthiopian businesses and consumers face continued high borrowing costs as the central bank prioritizes fighting inflation.