Addis Ababa — In a bold early move, newly appointed Central Bank Governor Dr. Eyob Tekalign (PhD) has taken decisive steps to tighten monetary policy. The National Monetary Policy Committee has raised the lending rate ceiling for commercial banks by six percentage points, setting it at 24 %, effective September 2025.
Dr. Eyob, previously State Minister of Finance, assumed the governorship amid mounting inflation and concerns over monetary stability. Analysts say the rate hike is intended to restrain excess credit expansion and cool inflationary pressures in the economy.
Under the new ceiling, commercial banks will no longer be allowed to lend above 24 %, limiting their flexibility in pricing loans. Supporters of the measure argue it will help rein in risk-taking and reduce inflation expectations. Critics, however, warn that tighter lending conditions may squeeze businesses already struggling with high costs of capital.
Observers view this policy shift as a test of Dr. Eyob’s resolve to chart a more conventional, interest-rate driven monetary framework in Ethiopia’s evolving financial landscape.
