Inflation has escalated significantly in 2011 and will be the main challenge for monetary policy. In an important change to monetary policy at the end of 2010, the National Bank of Ethiopia (NBE, the central bank) said that it would stop financing public spending and would adopt a low reserve money growth target. This is aimed at tackling the problems of excess liquidity and demonetisation. The NBE will try to tackle price rises by limiting money supply growth in order to reduce core, non-food inflation. Its task will be made difficult by several factors, including a lack of sophistication in financial markets, which weakens the link between interest rates and prices, and the large impact on inflation of other factors, such as the weather, the exchange rate and import costs. Foreign-exchange reserves are expected to remain at two to three months of import cover, as the government prefers to spend resources on development rather than build up reserves beyond this level.