NBE announces launch of new monetary policy framework

As reported by National Bank of Ethiopia

Summary

• The National Bank of Ethiopia has announced the launch of a new monetary policy framework that shifts from a quantity-based approach to an interest-rate based regime, marking a major modernization of the country's monetary policy toolkit.
• The centerpiece of the new framework is the National Bank Rate (NBR), set at 15%, which serves as the main policy rate and signals the NBE's stance on monetary conditions.
• The NBE will conduct Open Market Operations (OMOs) every two weeks to manage liquidity and steer short-term interest rates toward the policy rate.
• Standing Facilities will provide a ceiling and floor for overnight interbank rates, helping to contain volatility and ensure that banks can manage their daily liquidity needs.
• This reform aligns with international best practices and supports Ethiopia's transition to a more market-determined financial system, including the flexible exchange rate regime.
• BirrValue review: The interest-rate framework underpins today's bank pricing. Compare CBE, Awash, Dashen, and other bank rates on BirrValue—policy changes affect FX spreads over time.