On March 25, 2025, the Monetary Policy Committee (MPC) of the National Bank of Ethiopia (NBE) convened for its second meeting of the year. The meeting, in line with the NBE’s primary objective of maintaining price stability while supporting economic growth, focused on reviewing inflation dynamics, the financial sector, and global economic conditions.
Key Developments and Economic Outlook
Inflation, a major focus of the MPC, showed signs of improvement. The inflation rate for February 2025 stood at 15%, marking a decrease from the previous period. This positive trend was attributed to tight monetary policies, improved agricultural production, and controlled adjustments in administered prices. Notably, food inflation decreased significantly from 31% a year ago to 14.6%, while non-food inflation also declined to 15.6%. The month-on-month inflation rate of 0.5% in February signals an easing of price pressures.
Economic activity, as measured by the Composite Index of Economic Activity (CIEA), remains strong. Indicators from key sectors, including agriculture, industry, and services, point to sustained growth. A favorable rainy season has bolstered agricultural output, while easing foreign exchange constraints have supported industrial activity. The export sector, particularly in coffee and gold, continues to perform well, and services such as air transport and tourism have seen strong performance.
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