National Bank of Ethiopia Will Reduce Inflation by Taking Monetary Policy Measures: Governor Mamo

The National Bank of Ethiopia will undertake monetary policy measures that reduce inflation and its effects on society, Governor Mamo Mihretu said.

Briefing the media today, Mamo said inflation in Ethiopia has negatively impacted the social and economic spheres.

Explaining the major causes of increase in inflation, he cited supply limitation, increase in cost of manufacturing and macroeconomic policy, conflicts in parts of the country, increase in price of goods such as fertilizer, fuel and transport at the global as among the chief reasons.

Undertaking measures to increase supply— mainly agricultural products, undertaking structural change measures in transportation, logistics and trade competitiveness as well as implementing pertinent monetary policy are among the critical measures that would be taken to reduce inflation, the governor revealed.

According to him, the National Bank of Ethiopia will reduce inflation to 20 percent by the end of this Ethiopian budget year, and 10 percent by the end of the next fiscal year.

Also, the NBE targets to limit domestic loan by 14 percent by the end of the June 2024.

Moreover, it is also set to reduce direct loan to the government and limit the loan to 1/3rd of the loan the government took last year.

The interest rate that commercial banks are paying to the National Bank for emergency time loan facility while they face shortage of currency note will be increased from 16 percent to 18 percent, the governor said.

As an incentive for the key export sectors, especially for exporters engaging in manufacturing, the forex surrender requirement will be improved from 70/30 to 50/50, Mamo disclosed.

He further pointed out that reducing inflation meaningfully is not the responsibility of only one institution. It needs the participation and commitment of all stakeholders to implement all policy measures in place.

The annual inflation rate of the country was reduced from 34 percent of the previous budget year to 29.3 percent by the end of last June, 2023, it was learned.

Source: Ethiopian News Agency