Addis Ababa, Dec. 30, 2025 — Ethiopia’s central bank has scrapped the country’s long-standing 7% minimum savings deposit rate, a policy in place for decades, marking one of the most sweeping financial sector reforms in recent years as the National Bank of Ethiopia (NBE) moves toward a fully market-based interest-rate regime.
The National Bank’s Monetary Policy Committee (MPC) said the decision will allow interest rates to be determined purely by market demand and supply, replacing the previous framework where the minimum interest rate was legally fixed while banks could only negotiate higher rates with depositors.
The reform is intended to strengthen the interest-based monetary policy framework introduced in July 2024, enhance policy transmission, and make interest rates a more effective tool for managing liquidity, stabilizing inflation, and boosting savings competitiveness among banks.
“This historic shift allows banks and depositors to freely negotiate interest rates,” the MPC said, adding that the move is expected to deepen financial intermediation and improve efficiency in the banking sector.
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