Rwanda’s central bank has decided to maintain its key interest rate at 6.5% for the second consecutive monetary policy meeting. This decision comes despite a recent increase in inflation, as the bank expressed confidence that it will remain within its target band.
Annual inflation climbed to 7.4% in January, approaching the upper limit of the National Bank of Rwanda’s 2%-8% target range.
Governor John Rwangombwa explained at a press conference that the recent rise in inflation was primarily driven by unfavorable weather conditions leading to a delayed harvest, in contrast to the exceptional harvest of the previous year.
The bank has revised its average inflation forecast for 2025 upward to approximately 6.5%, from a previous estimate of 5.8%. It projects inflation to reach 4.1% in the following year.
“Though there are slight pressures on inflation, (it) remains within the band, and we are confident that at this rate, 6.5%, we’ll be able to maintain inflation within the policy band,” Rwangombwa stated. He cautioned that these projections are contingent on normal weather conditions and agricultural performance, and do not account for potential impacts from geopolitical tensions, both globally and regionally.
The bank’s chief economist, Thierry Kalisa, informed reporters that the East African nation’s economy likely surpassed its November projection of 8.3% growth for the previous year. The bank is currently revising its growth forecast of 7% for this year, which was initially projected in November.
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