The National Bank of Ethiopia (NBE) has maintained its policy rate at 16 percent and announced plans to absorb excess banking-system liquidity through open-market operations, as inflation remains above its single-digit target.

The decisions, approved by the central bank’s Board following its eighth Monetary Policy Committee meeting, were announced on 3 November 2026. The interest-rate corridor remains unchanged at plus or minus three percentage points.

The NBE will also continue applying targeted additional reserve requirements to individual banks if credit expansion threatens its inflation outlook, based on regular assessments of their loan-to-deposit ratios.

Headline inflation stood at 14.9 percent in September. Although the committee expects inflation to decline, it projects that the rate will remain in double digits over its six-month forecast horizon.

The decision comes amid rapid monetary expansion. Annual reserve-money growth accelerated to 87.2 percent in the first quarter of the 2026/27 fiscal year, compared with 72.6 percent a year earlier. Broad-money growth reached 40.2 percent, up from 33.2 percent.

The committee identified the NBE’s gold operations as a major contributor to reserve-money expansion, as purchases increased foreign assets and injected birr liquidity into the banking system.

It also reported that Treasury bill yields and interbank money-market rates had continued falling and had been negative after adjusting for inflation since May 2026. The committee linked declining short-term rates to banks’ large excess reserves held at the central bank.

Food inflation eased to 14.8 percent in September from 15.1 percent in June, while non-food inflation rose to 15.1 percent from 12.2 percent over the same period.

The committee will meet again at the end of January 2027, or earlier if conditions warrant.