The National Bank of Ethiopia (NBE) has removed restrictions on how much commercial banks can lend nearly three years after it first introduced the credit growth cap in August 2023.
The move was announced in a statement issued following a Monetary Policy Committee meeting, in which regulators hailed a "successful transition to an interest-based policy framework."
The cap was first applied in mid-2023, with the NBE seeking to contain skyrocketing inflation rates by limiting commercial banks' annual credit growth to 14 percent. In December 2024, the threshold was loosened to 18 percent, and then again to 24 percent in September 2025.
The NBE statement notes that while inflation has eased in the wake of economic reforms and forex market liberalization initiated in mid-2024, ongoing pressure stemming from the conflict in the Middle East will likely translate to double-digit headline inflation figures over the coming six months.
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Regulators are raising the NBE's policy rate by one percentage point to 16 percent as a "counter tightening measure" deemed necessary in light of the removal of the credit growth cap.
Meanwhile, the central bank is also reducing the forex surrender requirement on goods exports to 30 percent from 50 percent in an effort to "enhance export competitiveness and build market confidence."
The central bank's forex commission rate has also dropped by one percentage point to 1.5 percent.
