Rwanda Central Bank Cuts Key Rate for Second Consecutive Meeting

The National Bank of Rwanda has reduced its key interest rate by 50 basis points to 6.5%, marking its second consecutive rate cut this year. This adjustment reflects the central bank’s confidence in its inflation management and economic growth projections.

Governor John Rwangombwa announced the decision at a press conference, stating that inflation is expected to remain within the target band of 2% to 8%, with a projected average of around 5% for 2024 and 2025. This follows a previous rate cut in May, which also reduced the central bank’s rate by 50 basis points.

Inflation, which soared to 21.7% in November 2022, has since stabilized, falling to 4.9% in July 2024. This decrease is seen as a positive sign of effective monetary policy and economic stability. 

“Inflation is expected to remain within our band and around our medium objective of 5% for this year and next year,” Rwangombwa noted.

Rwangombwa highlighted that Rwanda’s economy has shown robust growth, with a notable 9.7% expansion in the first quarter of 2024. This strong performance is anticipated to continue into the third quarter. 

However, he acknowledged potential inflation risks, including geopolitical tensions impacting commodity prices and adverse weather affecting food prices.

Source: CNBC AFRICA