The National Bank of Ethiopia (NBE) has removed the temporary credit cap on commercial banks following the latest meeting of its Monetary Policy Committee. The central bank noted that the measure had served its purpose during the transition to an interest rate-based monetary policy framework. However, officials emphasized that the removal does not signal a retreat from its tight monetary stance; instead, the bank will shift toward indirect monetary policy instruments.
The NBE Board also approved a one percentage-point increase in the policy interest rate while maintaining the existing ±3 percentage-point interest rate corridor.
The Board further approved the introduction of a targeted reserve requirement that may be applied to individual banks based on their loan-to-deposit ratios if credit growth poses inflationary risks. It also reduced the foreign exchange commission rate from 2.5 percent to 1.5 percent.
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In addition, the National Bank lowered the mandatory foreign exchange surrender requirement on goods exports from 50 percent to 30 percent. The Monetary Policy Committee said it decided to maintain a tight monetary policy stance and that its next meeting is scheduled for the end of September 2026, or earlier if warranted by economic developments.
