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Ethiopia Holds Rate Steady at 15% to Combat Inflation
31 Mar
Summary
- Central bank maintained benchmark interest rate at 15% to control inflation.
- Inflation eased to below 10% in December, a significant drop from 2022.
- Global events pose upside risks to Ethiopia's inflation outlook.
Ethiopia's central bank has maintained its benchmark interest rate at 15%. This decision underscores the ongoing need for a tight monetary policy to curb inflation and keep it below the 10% target.
The National Bank of Ethiopia has held the rate steady for nearly two years as part of broader economic reforms. Inflation saw a notable decrease, falling below 10% in December for the first time in over five years, a marked improvement from its 37% peak in 2022.
However, policymakers expressed concern about external factors. The ongoing conflict in the Middle East is creating upward pressure on global oil prices and disrupting supply chains. These events present increased upside risks to Ethiopia's domestic inflation outlook.
To mitigate these risks, the bank emphasized the importance of maintaining the tight monetary policy stance. Ethiopia has also implemented measures such as releasing fuel reserves, reintroducing subsidies, and urging citizens to conserve fuel. Despite these efforts, fuel theft has increased as long queues form at gas stations.
