National Bank of Ethiopia warns Middle East war could reverse inflation gains
via The Reporter Ethiopia6 min read
The National Bank of Ethiopia's Monetary Policy Committee has cautioned that supply shocks from the war in Iran could undo progress made in reducing inflation. Following its sixth meeting, the committee reported a headline inflation rate of 9.7 percent for February 2026, attributing this success to tight monetary policies implemented since August 2023, including a cap on bank credit growth. However, the central bank stated that geopolitical tensions in the Middle East, specifically the war in Iran and the closure of the Strait of Hormuz, are expected to increase global oil prices and disrupt supply chains, posing significant upside risks to domestic inflation. Crude oil prices have already risen to nearly USD 110 per barrel since US-Israeli attacks on Iran began last month. The committee noted 9.2 percent GDP growth in 2024/5 and a balance of payments surplus, urging the NBE board to continue with tight monetary policies, including credit growth caps. The committee will reconvene in late April to assess if further policy measures are needed.
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This summary was AI-generated from a story originally published by The Reporter Ethiopia.
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