National Bank of Ethiopia Announces Major Monetary Policy Reforms: Credit Cap Removed and Policy Rate Increased to 16%

The National Bank of Ethiopia (NBE), through its Monetary Policy Committee (MPC), announced a comprehensive package of monetary policy reforms following its seventh regular meeting held on 13 July 2026 (Hamle 6, 2018 E.C.). The decisions, subsequently approved by the NBE Board of Directors, represent one of the most significant developments in Ethiopia's monetary policy framework since the commencement of the country's macroeconomic reform program in July 2024.These reforms complete Ethiopia's transition from a monetary policy regime primarily reliant on direct administrative controls to one based on market-oriented interest rate instruments. In announcing the reforms, NBE Governor Dr. Eyob Tekalign emphasized that the removal of the credit growth cap should not be interpreted as a relaxation of monetary policy. Rather, it constitutes a change in the monetary policy instrument while maintaining an overall tight monetary stance designed to contain inflation.