Contrary to earlier assurances, the National Bank of Ethiopia (NBE), through its Monetary Policy Committee (MPC), has announced that the credit cap imposed on commercial banks will remain in place for now.
The decision contradicts previous statements made by both former NBE Governor Mamo Mihretu and current Governor Eyob Tekalign(PhD)—who was serving as State Minister of Finance at the time—that the cap would be lifted by September 2025.
Rather than fully removing the restriction, the MPC has opted to relax the annual credit growth limit from the current 18 percent to 24 percent. The Committee cited the importance of credit control in sustaining the recent downward trend in inflation.
The credit cap was initially introduced in August 2023 as part of the NBE’s anti-inflationary measures.
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Established in 2023, the MPC is tasked with monitoring Ethiopia’s economy, forecasting macroeconomic trends, and advising on key monetary policies, including interest rates and credit growth caps.
While the Committee reiterated its intention to eventually lift the cap, it emphasized the need for careful assessment. A final decision will be made following further evaluations in upcoming meetings. The next MPC meeting is scheduled for December 2025.
In addition, the Committee decided to keep the National Bank Rate unchanged at 15 percent. Rates for the Standing Deposit Facility, Standing Lending Facility, and reserve requirements on bank deposits will also remain steady.
According to the MPC’s latest report, inflation stood at 13.6 percent at the beginning of September (end of the Ethiopian month of Nahase). Food inflation dropped from 18.8 percent to 12.7 percent, while non-food inflation rose to 15.1 percent. The report attributes the increase in non-food inflation in part to recent changes in the foreign exchange rate.
