ADDIS ABABA, Apr 1 – National Bank of Ethiopia has retained its benchmark interest rate at 15%, signaling a continued commitment to tight monetary policy as the country works to stabilize inflation and safeguard macroeconomic gains.
The decision comes as part of a broader reform agenda supported by the International Monetary Fund, under which policymakers have held rates steady for nearly two years. The strategy has delivered results, with inflation easing to below 10% in December for the first time in over five years, down sharply from a peak of 37% in 2022.
However, emerging global pressures are beginning to complicate the outlook.
The central bank warned that escalating geopolitical tensions in the Middle East are driving up oil prices and disrupting global supply chains, creating renewed upside risks to inflation. For an import-dependent economy like Ethiopia, higher fuel costs could quickly feed into broader price pressures across transport, food, and industrial inputs.
In response, authorities have introduced a series of short-term measures to cushion the impact. These include releasing strategic fuel reserves, reintroducing subsidies, and encouraging more efficient fuel consumption. Despite these efforts, supply constraints have begun to surface, with reports of long queues at filling stations and a rise in fuel theft incidents.
The central bank emphasized that the duration of global instability will be a key determinant of domestic inflation dynamics. While inflation has moderated significantly, policymakers appear cautious about easing too soon, opting instead to preserve stability until external risks subside.
Ethiopia’s policy stance reflects a broader trend across emerging markets, where central banks are increasingly balancing domestic recovery efforts against volatile global conditions.
