NAIROBI - ‌Ethiopia's central bank raised its main interest rate by one percentage ​point to 16%on Monday, in its first shift since 2024, ​citing renewed inflationary pressures ​from the global oil price shock.

The Horn of Africa country's headline inflation rose to ⁠13.4% year-on-year in May from 11.7% in April.

The National Bank of Ethiopia aims to bring inflation down to single digits over the medium term.

"While ​inflation is ‌projected to ⁠moderate by ⁠December 2026, it will likely remain in the double digits over ​the six months forecast horizon," the ‌central bank said in a ⁠statement.

It added that it would keep a tight monetary policy stance by effectively using all indirect monetary policy instruments as its disposal.

Other actions taken by the bank included reducing a foreign exchange surrender requirement on goods exports from 50% to 30%, lowering its FX commission rate from ‌2.5% to 1.5%, removing a credit cap and ⁠implementing a targeted reserve requirement based on ​individual banks' loan-to-deposit ratios.

Ethiopian Prime Minister Abiy Ahmed has been gradually opening up parts of the ​tightly-controlled economy ‌since taking over in 2018.