Rwanda central bank cuts key rate as inflation seen within target
TLDR
- Rwanda's central bank cuts key interest rate by 50 basis points to 7.0% due to positive inflation outlook.
- Annual inflation decreases from 21.7% in November 2022 to 4.5% in April, within the 2%-8% target range.
- Bank projects inflation to remain at around 5% for the current year and the upcoming year.
Rwanda’s central bank has reduced its key interest rate by 50 basis points to 7.0%, citing a favorable inflation outlook.
This decision comes after two previous monetary policy meetings where the rate was steady. In February, Governor John Rwangombwa indicated that a rate cut was possible if inflation trends remained positive.
Annual inflation peaked at 21.7% in November 2022 and dropped to 4.5% in April, comfortably within the central bank’s 2%-8% target range. The Rwandan bank projects inflation to stay around 5% for this year and the next.
Key Takeaways
Risks to the inflation outlook include global geopolitical tensions impacting commodity prices and adverse weather conditions in Africa. 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.
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