The National Bank of Ethiopia Announces the Launch of a New Monetary Policy Framework
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- čas přidán 8. 07. 2024
- As part of its primary goal of ensuring low and stable inflation, the NBE has been working towards the modernization of Ethiopia’s monetary policy framework over the past year. Several preparatory measures have been taken, in line with the NBE Medium-term Strategy Plan, to establish a supportive legal, institutional, and technical basis for meeting this objective. Most notably, the NBE’s mandate has been clearly defined to prioritize price stability relative to other goals. In addition, NBE’s technical capacity has been enhanced so as to adopt monetary policy tools that are better in line with modern central bank practices and more consistent with an increasingly dynamic and market-based financial system.
With the above preparatory work now largely complete, the NBE is today announcing the following set of measures to fully implement its new monetary policy framework:
NBE is moving to an interest-rate based monetary policy regime. The NBR will be used to signal policy stance and influence broader monetary and credit conditions.
Setting the initial policy interest rate at 15 percent. This rate reflects current economic conditions, such as declining inflation and low base money growth.
Bi-weekly monetary policy auctions. Open Market Operations (OMO) will be conducted every two weeks to manage liquidity, ensuring interbank market rates stay close to the NBR.
Introducing Overnight Lending and Deposit Facilities. These facilities will help banks manage daily liquidity at the NBR rate plus or minus 3 percent.
Launching an electronic interbank money market platform. This platform will facilitate continuous lending and borrowing among banks, promoting a functional interbank money market.
Retaining past liquidity management tools during the transition. Quantitative measures for monetary management may be used as supplementary tools, and specific instruments for interest-free banking providers will be specified soon.
These reforms represent a historic step in modernizing NBE’s monetary policy framework, aligning its policy tools with global best practices, and ensuring price stability in Ethiopia's economy. NBE calls for the cooperation of all stakeholders to ensure the successful implementation of this new monetary policy package.
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We've been having approx 15% inflation rate for years before inflation soared up some 3 4 years ago. What we need now is deflation. Ik most countries believe about 2 inflation rate is good but we can't afford living if prices stay constant from now on. We need DEFLATION!!!
But the deflation fath can crate resatsion on the economy
A translation or english version video would be great for the rest of us intererested in monetary policies please
As part of its primary goal of ensuring low and stable inflation, the NBE has been working towards the modernization of Ethiopia’s monetary policy framework over the past year. Several preparatory measures have been taken, in line with the NBE Medium-term Strategy Plan, to establish a supportive legal, institutional, and technical basis for meeting this objective. Most notably, the NBE’s mandate has been clearly defined to prioritize price stability relative to other goals. In addition, NBE’s technical capacity has been enhanced so as to adopt monetary policy tools that are better in line with modern central bank practices and more consistent with an increasingly dynamic and market-based financial system.
With the above preparatory work now largely complete, the NBE is today announcing the following set of measures to fully implement its new monetary policy framework:
NBE is moving to an interest-rate based monetary policy regime. The NBR will be used to signal policy stance and influence broader monetary and credit conditions.
Setting the initial policy interest rate at 15 percent. This rate reflects current economic conditions, such as declining inflation and low base money growth.
Bi-weekly monetary policy auctions. Open Market Operations (OMO) will be conducted every two weeks to manage liquidity, ensuring interbank market rates stay close to the NBR.
Introducing Overnight Lending and Deposit Facilities. These facilities will help banks manage daily liquidity at the NBR rate plus or minus 3 percent.
Launching an electronic interbank money market platform. This platform will facilitate continuous lending and borrowing among banks, promoting a functional interbank money market.
Retaining past liquidity management tools during the transition. Quantitative measures for monetary management may be used as supplementary tools, and specific instruments for interest-free banking providers will be specified soon.
These reforms represent a historic step in modernizing NBE’s monetary policy framework, aligning its policy tools with global best practices, and ensuring price stability in Ethiopia's economy. NBE calls for the cooperation of all stakeholders to ensure the successful implementation of this new monetary policy package.
He forgot to like, share and subscribe 🙂↕️😝
So we need to follow up this channel as it is our "FED", can help when Ethiopian stock market launched.
We hope such dynamic changes will lead us to better financial stability!
It is just a wonderful move! Kudos Mamo & Co.
Really great ...good job
I believe the utilization of such a instrument will have no to minimum effect on the broader economy of Ethiopia. Unless there is a way to mandate, and pass a more rigorous policies on other banks, to ensure the thorough practices. Even then, I feel like we are targeting the issue at a bad angle. The issue is people don't have money, so increasing the interest rate will just make the life of majority Ethiopians harsher. I have feeling the high interest rate will back fire. Is there a back-test or a data to back the potential impact of such a change? One of the reasons central banks raise interest rates is to control inflation. However, if inflation is not primarily driven by excess demand but by supply-side issues (such as supply chain disruptions, agricultural output variability, or global commodity price changes), increasing interest rates might not effectively control inflation and could instead stifle economic growth.
Without a policy-led governance and the country driven by the whims of the PM, I expect more disaster.
@@AgonafirBanjaw I fully agree my friend. What crazier is the potential our country has, but undermined with corruption and hatred. Basic tribalism. We have the most talented people.. We got the natural resources.. Until the people unite, the idiots will continue on taking advantage of them.
it's good if you add master card to inter into Ethiopia 🇪🇹 In all countries region
Great job, what an achievement.
ከገባህ ንገረን!!!የምን ወለድ ነው?
Kudos@ Mamo. Im seeing promising chnges at NBE.
Can someone explain what he said in layman terms.
Today, NBE announced the major reforms for the financial market of Ethiopia. Governor Mamo Mihretu of the National Bank of Ethiopia is set to initiate a formal market operation in two days, allowing banks to trade their liquid assets. This move replaces the previous informal exchanges and is seen as a step towards an interest-based monetary policy framework, potentially invigorating Ethiopia’s financial market.
In a meeting with bank presidents, Mihretu announced a new policy interest rate of 15%, which is three percentage points lower than the rate previously used for lending to commercial banks experiencing liquidity issues. He also introduced overnight lending and deposit facilities to help banks manage short-term liquidity, with these facilities offering an interest rate three percent below the policy rate.
Mihretu clarified that these new interest rates do not affect the rates banks offer to their depositors or borrowers. However, he indicated that there would be a review of the savings rates paid to depositors.
Additionally, the central bank will conduct biweekly auctions of securities to either absorb excess money from the economy or inject funds as needed. Mihretu also revealed plans for a more active interbank lending market, facilitated through the National Bank of Ethiopia’s central security depository system.
Describing these NBE reforms as a historic shift in the country’s monetary policy, Mihretu plans to meet with the treasurers of all commercial banks on Wednesday to further discuss these developments. This comprehensive strategy marks a move towards a more market-oriented and dynamic financial sector in Ethiopia.
Moreover, the National Bank of Ethiopia has announced that the country’s inflation rate for the month of June has dropped to 19.9 percent. Inflation was 29.3 percent in the same month last year.
what this guy is saying is
1your money in bank if you have one will deprecious by atlest of 40% after a year
1.2.national bank LOAM INTERST RATE FOR BANKS will increase from current 7% to 15% which means bank loan rate will increase to atlest 28% minimum.which they think will hinder black rate to increase through increasing bank loan rate but possiblily not. And this means bank rate will increase by 8-10% at the start to 40% after 1year and black rate will increase by 40% or above at the start.. you can study the experience of Nigeria which changes from fixed rate to floating by 2006 and for your imagination at the start NIARA TO USD RATE WAS 237 BUT NOW IT IS 1588/1USD.
1.3.HE IS SAYING LIVING COST WILL INCREASE DRAMATICALLY AND YOUR MONEY ON HAND EXAMPLE YOUR 100BIRR WILL BECOME 58BIRR AFTER A YEAR BECAUSE OF DEVALUATION.
2 by this government is able to print money and can inject it to the market AMD ALSO THEY CAN PRINT MONEY AND CAN PAY PROJECTS LIKE UGANDA DID AND FAILED.
3.tax rate on item will increase minimum of 20% of lower tax rated items like ev cars to a higher of 80% on high rated items like hybrid cars and refrigerators.
I CAN LIST MANY THINGS
Semu esu endalew le ENANITE ASIBEN NEW YIHEN YAWETANEW NEW. WERIKU DEGIMO ENDALIKUH NEW BEWALA YIGEBAKAL..AFTER ITS IMPLIMENTATION
The Ethiopian economy has always been sick, so this policy choice is not between good and bad but between bad and worse. I do not think the government had any other choice after the economy ran badly following the civil war in Tigray, Oromia, Amhara, and other places. The issue now is to work on the root problem that drove the already bad economic performance into its worst form in the last five years, which is conflict. Now the government has to focus in resolving the long-running conflicts in all regions of the country to help tap the positive results from this policy initiative. God Bless My Country.
Devalue the currency ,we will have a competitive advantage
It's a good job National Bank
👏👏
Good job🙌
Smells like Washington Consensus prescriptions that Mamo represents eloquently.
Great job
Its about time
WE NEED GOOD SMART PPL IN THE BANKING SECTOR
Good job NBE
wonderful
A translation or english version video would be great
Ethiopians don’t speak English
@@eliasdemisse5645 also somalis doesn't speak ahmaric
I'm not Amharic speaker please on oromifa
ishi yegna jerome powell min alk
Funny. Do you know how much money is being printed or did you outsource that to kkkkkk
This dude is going to devaluate our money.
You got the point bro
How come! Food prices are increasing as non food items! Why deliberate lie???????
How did you come up with 15bps??
የህፃናት መጫወቻ ሆነች አገሪቷ!
Fire the old tarts from NBE
nbe
ትልቅ ስራ ነው 👍 በርቱ
አውንም ብድር የመስጠትን መጠን መቀነስ ያስፈልጋል አምና በተወሰነው ውሳኔ ነው ይሄ ለውጥ የመጣው
wendme ke gebak eski negeregn . .ahun 200 birr wagaw ychemral malet new weys value ywerdal according this?
ያልገባው 😮
የገባው 😂
ግራ የገባው😢
..... .... .....
egziabher ymesgen ene ke ewket netsa negn
Jargon 😂😂😂
I don't expect more from you. You being the legislative, judicial and executive 3 in 1 (the devil trinity) You appoint an individual consultant with low proficiency as an advisor with low budget and who google for online data, then make speculation and recommend then you refer that as a national data being collected coz you are also the judicial 😂😂😂😂😂. I wonder how you people even know the term macro economics let alone it's concept and it's application. One thing I personally is assured is that you are paving the strategy blocks that has prevented the country from foreigners dominance. "Placebo"