BNR keeps key rate unchanged

Rwanda’s central bank (BNR) decided to keep its key interest rate steady at 7.5 per cent on Thursday. Nonetheless, the governor indicated a potential rate cut in one of the upcoming meetings if inflation trends continued to show promise.

Governor John Rwangombwa additionally stated that the economic growth for the previous year was anticipated to exceed the earlier forecast of 6.2 per cent.

This marks the second consecutive occasion where the National Bank of Rwanda has maintained its key lending rate unchanged, following an increase from 7.00 per cent in August.

In November 2022, annual inflation reached its highest point at 21.7 per cent. However, it decreased to 5.0 per cent by January, falling within the policymakers’ target range of 2 per cent to 8 per cent.

Rwangombwa stated during a news conference, “We might begin decreasing the policy rate in the upcoming MPC (Monetary Policy Committee) rounds depending on the behavior of these economic variables.”

“So far what we project is positive, and if it continues like this then we might start reducing the policy rate.”

In its most recent forecast, the bank indicated an expectation for inflation to average around 5 per cent this year. However, potential risks include geopolitical tensions that might disrupt global trade and weather events that could affect Rwanda’s agricultural output.

In December, both the finance ministry and the central bank forecasted a growth rate of 6.6 per cent for the East African economy this year.