NBR Governor Soraya Hakuziyaremye announced the decision on Thursday, May 15, a day after a meeting of the Monetary Policy Committee (MPC), which sets the rate quarterly to guide the cost of borrowing and maintain macroeconomic stability.
This marks the fourth consecutive time the MPC has held the rate at 6.5 percent, following its initial reduction from 7.0 percent in August 2024.
Addressing members of the press, Governor Soraya said the current rate remains appropriate to keep inflation within the targeted 2â€"8 percent band.
Headline inflation rose to 6.7 percent in the first quarter of 2025, up from 5.2 percent in the previous quarter, largely driven by increases in core and fresh food prices. Core inflation climbed to 6.1 percent, while fresh food inflation surged to 11.2 percent, largely due to a base effect from unusually low prices in early 2024 and rising meat prices.
Despite the uptick, inflation remains within the medium-term target range and is expected to average 6.5 percent in 2025 before easing to 3.9 percent in 2026.
'Inflationary risks remain, particularly from global geopolitical tensions and shifting trade policies,' the central bank boss warned, but emphasised that the current rate should continue to anchor inflation expectations.
The MPC also noted Rwanda's ongoing economic resilience, with the Composite Index of Economic Activity (CIEA) registering a 9.3 percent year-on-year increase in Q1 2025, supported by robust industrial and services performance. The economy grew by an impressive 8.9 percent in 2024, buoyed by a rebound in agriculture and strong domestic demand.
However, Rwanda's trade deficit widened by 10.8 percent in Q1 2025, as merchandise exports fell by 3.0 percentâ€"mainly due to declining re-exportsâ€"while imports rose 5.8 percent, driven by increased demand for machinery and raw materials. This put pressure on the Rwandan franc, which depreciated by 2.46 percent against the U.S. dollar by the end of April.
Money market trends have followed suit. The interbank rate declined to an average of 6.78 percent in Q1 2025, down from 8.29 percent a year earlier, reflecting the impact of earlier rate cuts. Deposit and lending rates also fell, with the average lending rate dropping to 15.89 percent from 16.35 percent.
Going forward, the central bank reaffirmed its commitment to closely monitoring both global and domestic economic trends and to adjusting policy as needed to maintain price stability and support growth.
"The MPC stands ready to take appropriate measures if inflationary pressures intensify,' Soraya stated.
Wycliffe Nyamasege
Source : https://en.igihe.com/business/article/rwanda-s-central-bank-maintains-lending-rate-at-6-5-54189
