The National Bank of Ethiopia (NBE) has unveiled a comprehensive new monetary policy framework aimed at modernizing the country's financial system and preparing for greater exchange rate flexibility.
Governor Mamo Mihretu presented the framework at a press conference, highlighting key reforms including the introduction of an inflation-targeting regime, enhanced open market operations, and a more transparent interest rate corridor system.
The new framework marks a significant shift from the NBE's traditional approach of directly managing the money supply. Under the new system, the central bank will use a policy rate as its primary tool for managing inflation, similar to practices adopted by central banks in advanced economies.
"This reform is critical for Ethiopia's economic transformation," Governor Mihretu stated. "It will improve the transmission of monetary policy, enhance financial stability, and support sustainable economic growth."
International financial institutions, including the IMF and World Bank, have welcomed the reforms, noting they align with Ethiopia's broader program of economic liberalization. The phased implementation is expected to begin in the first quarter of 2026.
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