Monetary policy
The central bank holds its rate at 16% and says inflation will stay in double digits
Baankiin Biyyoolessaa dhala isaa 16% irra tursiise; qaala'iinsi gatiis dijitii lama ta'uun itti fufa
Posted 25 Tikimt 2019 E.C. · 07:00 EAT (1:00 Ethiopian time) · Updated 25 Tikimt 2019 E.C. · 15:28 EAT (9:28 Ethiopian time) · Published by Ensight (Mo Creatives)
The National Bank of Ethiopia left its policy rate at 16% on 3 November and kept the corridor around it at 3 percentage points either side. Annual inflation was 14.9% in September, down from 15.1% in August but above 13.2% a year earlier. The bank expects prices to keep easing, yet still to rise by more than 10% a year over the next six months.
The National Bank of Ethiopia left its policy rate unchanged at 16% at the eighth meeting of its Monetary Policy Committee on Monday 3 November. It also kept the interest-rate corridor around that rate at 300 basis points either side. The rate has stood at 16% since July, when the bank raised it by one percentage point and, in the same decision, removed the annual cap on how fast banks may grow their lending.
What the bank sees
Annual inflation was 14.9% in September, according to the Ethiopian Statistical Service, down from 15.1% in August and 15.3% in July (August's figure). It is still higher than a year earlier: 13.2% in September 2025. Food prices rose 14.8% and everything else 15.1%, so the pressure is now slightly stronger outside the food basket.
The committee put that down mainly to costs: higher electricity tariffs, dearer kerosene and transport fuel, and supply pressures from the war in the Middle East. It expects inflation to keep declining, but says it will stay in double digits over its six-month forecast horizon. The bank's medium-term goal remains inflation in single digits.
How tight is 16%?
With inflation at 14.9%, the policy rate is 1.1 percentage points above it (Ensight calculation). That is a little tighter than in August, when the gap was 0.9 points (our analysis), and tighter only because prices slowed, not because the rate rose.
What comes next
The bank said it will watch commercial banks' loan-to-deposit ratios closely and keep applying targeted reserve requirements where credit growth threatens to fuel inflation. Governor Eyob Tekalign told reporters the banking sector remains safe and sound, with low non-performing loans and adequate capital.
The committee is next scheduled to meet at the end of January 2027, and said it may meet earlier if conditions require.
Source: National Bank of Ethiopia, Monetary Policy Committee, 3 November 2026; inflation from the Ethiopian Statistical Service · see the source
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