{
  "title": "Building Monetary Transmission in Ethiopia",
  "publication": "Selected Issues Papers, July 30, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/selected-issues-papers/issues/2025/07/30/building-monetary-transmission-in-ethiopia-569124",
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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.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- This Selected Issues Paper reviews Ethiopia’s transition to an interest-rate based monetary framework.\n- Monetary transmission is defined as \"the process through which policy rate changes affect inflation and economic activity.\"\n- For the interest-rate based framework to be effective, monetary transmission must function reliably.\n- Achieving reliable transmission requires:\n  - a clear, well-communicated policy framework,\n  - strong analytical capacity,\n  - continued efforts to address structural features that may hamper transmission."
    },
    {
      "heading": "Key findings and themes",
      "content": "- The paper focuses on Ethiopia’s transition from previous frameworks toward an interest-rate based monetary policy.\n- Emphasis is placed on the institutional and structural prerequisites for effective monetary policy transmission, including communication and analytical capacity.\n- Structural features that may hamper transmission are identified as ongoing concerns that require continued effort."
    },
    {
      "heading": "Policy recommendations and implications",
      "content": "- Strengthen clarity and communication of the policy framework to enhance the credibility and signaling role of the policy rate.\n- Build and maintain strong analytical capacity within the central bank to support policy formulation and evaluation.\n- Continue addressing structural impediments to ensure policy rate changes transmit effectively to inflation and economic activity."
    },
    {
      "heading": "Publication and metadata",
      "content": "- Authors: Deirdre Daly, Bryan Gurhy\n- Publication date: July 30, 2025\n- Format: Selected Issues Paper\n- Pages: 18\n- Volume: 2025\n- Issue: 106\n- Series: Selected Issues Paper No. 2025/106\n- DOI: https://doi.org/10.5089/9798229018777.018\n- Stock No: SIPEA2025106\n- ISBN: 9798229018777\n- ISSN: 2958-7875\n- Subjects: Central bank policy rate, Exchange rates, Financial services, Foreign exchange, Inflation, Interbank rates, Monetary policy, Monetary policy frameworks, Prices\n- Keywords: building monetary policy transmission; Central bank policy rate; Exchange rates; Inflation; Interbank rates; interest-rate based monetary policy; monetary policy effectiveness; monetary policy frameworks; Monetary policy transmission; MPC meeting statement; paper reviews Ethiopia's transition; rate change; Sub-Saharan Africa\n\nInternational Monetary Fund\n\n---\n\n Content in this bundle\n\n- Sipea2025106\n  - Sipea2025106 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Sipea2025106 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/selected-issues-papers/issues/2025/07/30/building-monetary-transmission-in-ethiopia-569124"
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    "Authors: Deirdre Daly, Bryan Gurhy",
    "Published: July 30, 2025",
    "Series: Selected Issues Papers",
    "DOI: https://doi.org/10.5089/9798229018777.018",
    "This Selected Issues Paper reviews Ethiopia’s transition to an interest-rate based monetary framework.",
    "Monetary transmission is defined as \"the process through which policy rate changes affect inflation and economic activity.\"",
    "For the interest-rate based framework to be effective, monetary transmission must function reliably.",
    "Achieving reliable transmission requires:",
    "The paper focuses on Ethiopia’s transition from previous frameworks toward an interest-rate based monetary policy.",
    "Emphasis is placed on the institutional and structural prerequisites for effective monetary policy transmission, including communication and analytical capacity.",
    "Structural features that may hamper transmission are identified as ongoing concerns that require continued effort.",
    "Strengthen clarity and communication of the policy framework to enhance the credibility and signaling role of the policy rate.",
    "Build and maintain strong analytical capacity within the central bank to support policy formulation and evaluation.",
    "Continue addressing structural impediments to ensure policy rate changes transmit effectively to inflation and economic activity.",
    "Authors: Deirdre Daly, Bryan Gurhy",
    "Publication date: July 30, 2025",
    "Format: Selected Issues Paper",
    "Pages: 18",
    "Volume: 2025",
    "Issue: 106",
    "Series: Selected Issues Paper No. 2025/106",
    "DOI: https://doi.org/10.5089/9798229018777.018",
    "Stock No: SIPEA2025106",
    "ISBN: 9798229018777",
    "ISSN: 2958-7875",
    "Subjects: Central bank policy rate, Exchange rates, Financial services, Foreign exchange, Inflation, Interbank rates, Monetary policy, Monetary policy frameworks, Prices",
    "Keywords: building monetary policy transmission; Central bank policy rate; Exchange rates; Inflation; Interbank rates; interest-rate based monetary policy; monetary policy effectiveness; monetary policy frameworks; Monetary policy transmission; MPC meeting statement; paper reviews Ethiopia's transition; rate change; Sub-Saharan Africa",
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