By Abdullahi Salad - Reporter
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ADDIS ABABA, 4 November 2026 The National Bank of Ethiopia (NBE) has kept its policy rate at 16% as inflation remains well above target.
The decision was reached after the bank’s 8th Monetary Policy Committee meeting, which reviewed inflation, economic growth and developments in the monetary and financial sectors. The bank also kept its interest rate corridor unchanged at ±3 percentage points.
The bank said maintaining tight monetary conditions is essential to achieving its medium-term goal of bringing inflation below 10%.
Ethiopia’s inflation stood at 14.9% in September. The bank said inflation had begun to ease from its peak but remains well above its target and is projected to stay elevated over the next six months.
Food inflation eased slightly to 14.8% in September, down from 15.1% in June. However, non-food inflation rose to 15.1%, up from 12.2%.
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In the food category, prices of bread and cereals, vegetables and pulses, and coffee beans increased. In the non-food category, electricity tariffs and kerosene pushed up the cost of living.
The bank said supply-side factors remain the main drivers of inflation following the Middle East conflict. It projected that inflation will decline.
The bank also warned of rapid monetary growth. Annual reserve money growth reached 87.2% in the first quarter of the 2026/27 fiscal year, up from 72.6% in the same period last year, driven by its gold purchases.
Although inflation remains a challenge, the bank said Ethiopia’s economy continues to grow strongly in the 2026/27 fiscal year. It pointed to progress in electricity generation, cement and steel production, tourism, air travel, gold exports and tax revenue collection.
The 16% policy rate was set in July 2026, when the bank raised it by one percentage point and removed the cap on bank credit growth.