Central Bank Governor John Rwangombwa made the announcement following a meeting of the Monetary Policy Committee (MPC) earlier this week.
Addressing members of the press, Governor Rwangombwa noted that in the third quarter of 2024, headline inflation decreased to 4.1 percent, down from 5.1 percent in the second quarter, and is expected to remain within the target range, averaging around 4.6 percent for the year.
Looking ahead, the Central Bank revised its inflation projection for 2025 upwards, from 5.0 to 5.8 percent, due to expected pressures on food prices from unfavourable weather conditions.
"Due to unfavourable weather conditions this season, we expect the performance of maize and key agricultural products for Season A, beginning in December, to be less favourable than initially projected," he explained.
The Governor also warned that the projections could be affected by various risks and shocks. Heightened global geopolitical tensions, including conflicts in the Middle East and between Ukraine and Russia, could create uncertainties around international commodity prices.
Looking at the components of inflation for the third quarter, core inflation decreased to 5.3 percent, down from 6.4 percent in the second quarter of 2024. This was mainly due to a reduction in food prices, including rice and sugar.
Energy inflation slightly increased, with the Central Bank Governor attributing the rise to the base effect of solid fuels.
"The prices were very low in the same quarter last year," he noted.
Fresh food inflation decreased to 0.2 percent from 1.6 percent, due to strong agricultural performance in the first two quarters.
The decision to maintain the country's benchmark lending rate at 6.5 percent is expected to make borrowing more affordable compared to last year, encouraging increased spending and investments.
Wycliffe Nyamasege
Source : https://en.igihe.com/economy/article/rwanda-s-central-bank-maintains-lending-rate-at-6-5
