Ethiopia Lifts Key Policy Rate to 16%

2026-07-13 13:26 By Luisa Carvalho 1 min. read

The National Bank of Ethiopia raised its key interest rate by 1 pp to 16% on July 13th, 2026, marking the first adjustment since the benchmark was introduced at 15% in mid-2024, aiming to curb price pressures.

Inflation accelerated to a ten-month high of 13.4% in May after falling into single digits in December 2025 for the first time in almost a decade, amid the US–Iran conflict.

The central bank expects inflation to fall by the end of 2026 but acknowledged that prices are likely to remain elevated in the near term.

It also scrapped the 24% credit growth ceiling hat had restricted bank lending since August 2023, when inflation was nearing 30%.

Full removal of the cap had been repeatedly delayed until alternative policy tools were in place.

A targeted safeguard was introduced alongside the cap's removal to prevent excessive lending.

The NBE also reduced banks' foreign exchange transaction commission to 1.5% from 2.5% and eased exporters' surrender requirement to 30% from 50%.



News Stream
Ethiopia Lifts Key Policy Rate to 16%
The National Bank of Ethiopia raised its key interest rate by 1 pp to 16% on July 13th, 2026, marking the first adjustment since the benchmark was introduced at 15% in mid-2024, aiming to curb price pressures. Inflation accelerated to a ten-month high of 13.4% in May after falling into single digits in December 2025 for the first time in almost a decade, amid the US–Iran conflict. The central bank expects inflation to fall by the end of 2026 but acknowledged that prices are likely to remain elevated in the near term. It also scrapped the 24% credit growth ceiling hat had restricted bank lending since August 2023, when inflation was nearing 30%. Full removal of the cap had been repeatedly delayed until alternative policy tools were in place. A targeted safeguard was introduced alongside the cap's removal to prevent excessive lending. The NBE also reduced banks' foreign exchange transaction commission to 1.5% from 2.5% and eased exporters' surrender requirement to 30% from 50%.
2026-07-13
Ethiopia Leaves Policy Rate Steady at 15%
The National Bank of Ethiopia kept its key interest rate unchanged at 15% during its March 2026 meeting, emphasizing that a tight monetary policy is required as the Middle East conflict has raised upside risks to the inflation outlook. The Committee noted that inflation stood at 9.7% in February, continuing its downward trend and remaining within the single-digit target since December 2025. However, persistent geopolitical tensions continue to push oil prices up, impacting both global and domestic markets. The government has used significant foreign currency reserves to secure fuel imports and has reintroduced subsidies to ease the impact on consumers.
2026-03-31