Rwanda’s Central Bank has cut its key interest rate by 50 basis points to 7.0%, after maintaining it unchanged for two consecutive meetings at 7.75%.
- In February, Governor John Rwangombwa said the bank could reduce the rate at upcoming meetings if inflation dynamics remained positive.
- This reduction the interest rate brings borrowing costs to their lowest since mid-2023.
- Annual inflation peaked at 21.7% in November 2022. It fell to 4.5% in April, well within policymakers’ 2%-8% target range. The Rwandan bank projects inflation to stay around 5% for this year and the next.
“Risks to the inflation outlook include global geopolitical tensions impacting commodity prices and adverse weather conditions in Africa,” said Rwangombwa.
Despite these risks, Rwanda’s economy grew by 8.2% in 2023 and continued to expand in the first quarter of 2024, driven by strong performances in agriculture, services, and industry.
The government forecasts growth rates of 6.6% for 2024, 6.5% for 2025, 6.8% for 2026, and 7.2% for 2027.
Earlier on this month, the Executive Board of the International Monetary Fund (IMF) concluded the third reviews under the Policy Coordination Instrument and the arrangement Under the Resilience and Sustainability Facility (RSF), and first review under the Standby Credit Facility (SCF) arrangement with Rwanda.
With this review, about US$ 76.2 million under the RSF and US$ 88.4 million under the SCF become available for Rwanda
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