Building Monetary Transmission in Ethiopia

This Selected Issues Paper reviews Ethiopia’s transition to an interest-rate based monetary framework. For this framework to be effective, monetary transmission—the process through which policy rate changes affect inflation and economic activity—must function reliably.
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Volume/Issue: Volume 2025 Issue 106
Publication date: July 2025
ISBN: 9798229018777
$15.00
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Banks and Banking , Inflation , Money and Monetary Policy , Monetary policy transmission , monetary policy frameworks , monetary policy effectiveness , interest-rate based monetary policy , building monetary policy transmission , paper reviews Ethiopia's transition , rate change , MPC meeting statement , Central bank policy rate , Inflation , Exchange rates , Interbank rates , Sub-Saharan Africa

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Summary

This Selected Issues Paper reviews Ethiopia’s transition to an interest-rate based monetary framework. For this framework to be effective, monetary transmission—the process through which policy rate changes affect inflation and economic activity—must function reliably. Achieving this, requires a clear, well-communicated policy framework, strong analytical capacity, and continued efforts to address structural features that may hamper transmission.

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