The Central Bank has reaffirmed its decision to maintain an 18pc cap on credit growth, reinforcing a commitment to tighter monetary policy during persistent inflation and economic uncertainty. The National Bank of Ethiopia's (NBE) monetary policy committee cited ongoing concerns over inflation, which stood at 19.9pc year-on-year (YoY), and liquidity imbalances as reasons to uphold the restriction on lending. Bankers and analysts interpret this move as evidence of regulators' determination to control credit expansion and address rising consumer prices. Businesses, particularly those seeking loans for expansion or new projects, are expected to struggle under the continued lending constraints. Observers note policymakers' increasing caution, unwilling to loosen credit controls while inflation remains elevated. The consumer price index for February this year was 15.5pc, according to the Ethiopian Statistics Services (ESS). The economy has recently faced inflationary pressures, prompting Central Bank Governor Mamo Mihretu to adopt stricter monetary measures. The latest Central Bank's decision confirms with broader macroeconomic policy reforms agreed upon with the International Monetary Fund (IMF), signalling tighter control over money supply and limiting private-sector lending. Financial experts warn that while the lending cap could ease inflationary pressures, economic growth may slow, particularly for companies heavily reliant on borrowed funds. The impact will likely ripple through commercial banks and microfinance institutions, demanding more efficient capital allocation. With the cost of living still high and the economic outlook remains uncertain, businesses are preparing for tougher times ahead.
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