House Urges Central Bank to Maintain Tight Monetary Policy

Addis Ababa, June 27, 2026 (ENA)— The National Bank of Ethiopia (NBE) was urged to continue strengthening its tight monetary policy aimed at controlling inflation.

This recommendation came after the House of People's Representatives (HPR) Plan, Budget, and Finance Affairs Standing Committee reviewed the performance report of the Bank for the first 11 months of the 2017 Ethiopian budget year.

NBE Governor Mamo Mihretu presented the Bank's performance report, covering its monetary policy, measures taken to reduce inflation, and the outcomes of foreign exchange reforms, including areas where results were not achieved.

In his presentation, the Governor pointed out the volatile global geopolitical landscape that has made economic growth unpredictable for countries.

 

Yet Ethiopia has undertaken reform activities to overcome this challenge and achieve sustainable economic growth, he said.

According to Mamo, the country has effectively managed economic pressures through fiscal and monetary policies as well as in foreign exchange earnings in the current Ethiopian budget year.

Emphasizing the significant role of the monetary policy reform plays in stabilizing inflation and  cost of living, the Governor stated that the NBE did not provide any loans to the government  for the first time this year.

He further elaborated that the decision to introduce free floating exchange rate after over 50 years has registered great success.

This has in turn significantly narrowed the large disparity between the legal and parallel markets, leading to an increase in foreign currency flow into the economy.

Mamo explained that the banking sector is healthy by all standards, with increase of inter bank lending and foreign exchange reserves.

Foreign exchange earnings have significantly increased in the past 11 months, and the government's capacity to repay foreign debt has grown proportionally, he added.

On his part, HPR Plan, Budget and Finance Affairs Standing Committee Chairperson Dessalegn Wedajo  stated that the reform undertaken by the NBE in various sectors has played a significant role in creating economic stability.

The committee also recognized the Bank's reforms, particularly the amendment of proclamations in the current budget year, as strong points that have yielded tangible results.

 He specifically noted the decision to end lending to the government as among the measures to control inflation has brought significant results.

The substantial growth in bank deposits and foreign exchange reserves of banks in the current Ethiopian budget year were also cited as indicators of the success  of the reforms.

The chairperson urged the central bank to strengthen the tight monetary policy it has implemented to control inflation.

He also emphasized the need to focus on increasing lending to small enterprises and agriculture.

Furthermore, Dessalegn called on the NBE to explore support options to enhance the competitiveness of domestic banks, following the issuance of a directive allowing foreign banks to operate in the country.