Addis Ababa - Ethiopia’s central bank extended limits on bank lending growth, signaling it will maintain tight monetary policy even as inflation slows to single digits and economic growth remains strong.
The National Bank of Ethiopia’s Monetary Policy Committee decided to keep the policy rate and annual credit growth caps unchanged, saying the measures are necessary to sustain the recent decline in inflation and protect macroeconomic stability amid rising global uncertainty. Inflation fell to 9.7% in February, continuing a steady decline driven by tight monetary policy, fiscal discipline and supply-side improvements.
Despite the tight policy stance, Ethiopia’s economy continues to expand rapidly, with real GDP growing 9.2% in the last fiscal year, supported by services and industrial activity, particularly gold production. At the same time, bank credit and money supply continue to grow strongly, while some private banks face liquidity pressure, reflected in rising interbank interest rates.
The central bank warned that rising global oil prices linked to Middle East tensions could create new inflation pressures and said policymakers will review economic conditions more frequently, leaving the door open for further policy action if global risks begin to affect the domestic economy.