The decision was taken by the Monetary Policy Committee (MPC) during its quarterly meeting on Wednesday. The CBR, which serves as the benchmark rate guiding commercial banks in setting lending and deposit rates, is the main tool used by BNR to manage inflation.
May had marked the fourth consecutive time the MPC maintained the rate at 6.5 percent, following its initial reduction from 7.0 percent in August 2024.
Addressing the press on Thursday, Central Bank Governor Soraya Hakuziyaremye revealed that inflation remained within the expected range of 2 to 8 percent in the second quarter of 2025. It is now projected to average 7.1 percent this year before easing to about 5.6 percent in 2026.
The outlook, however, has been revised upward from the initial forecast of 6.5 percent due to risks such as adverse weather conditions that could affect agricultural output and uncertainties in global trade and commodity markets.
"The Monetary Policy Committee has decided to increase the central bank rate by 25 basis points to 6.75 percent, a level considered adequate to keep inflation within the target range with forecasts averaging 7.1 percent in 2025 and 5.6 percent in 2026," the Central Bank boss said.
Despite global trade headwinds, Rwanda's economy has shown resilience. Real GDP expanded by 7.8 percent in the first quarter of 2025, driven by strong performance in services and industry. High-frequency indicators point to continued growth in the second quarter, with the Composite Index of Economic Activity (CIEA) up 12.5 percent year-on-year, supported by strong credit growth.
External trade also improved, with merchandise exports rising 15.5 percent in Q2, boosted by higher coffee and mineral exports, alongside a 31.1 percent surge in non-traditional exports such as cooking oil and wheat flour. Imports grew modestly by 3.3 percent, helping narrow the trade deficit by 2.9 percent compared to the same period last year.
The foreign exchange market showed signs of stability, with the Rwandan franc depreciating by 2.96 percent against the US dollar by end-June, a slower pace than the 3.73 percent seen in the same period in 2024. This moderation was attributed to an improved trade balance, domestic foreign exchange reforms, and a weaker dollar globally.
Looking ahead, BNR expects inflation to remain within its target band, though risks remain from both domestic and external shocks. The MPC reaffirmed its readiness to adjust policy further if needed to ensure price stability.
Wycliffe Nyamasege
