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.
Points clés à retenir
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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