The National Bank of Rwanda (BNR) has kept its key interest rate at 6.5% to sustain efforts in controlling consumer price increases.
The decision, announced on February 13 during the quarterly Monetary Policy Committee (MPC) update, reflects an analysis of global and national economic trends and informs future policy actions.
Why the Rate Remains Unchanged
Since August 2023, the central bank has maintained this policy rate, expecting inflation to stay within the 2% to 8% target range in 2025. Governor John Rwangombwa emphasized that this move aims to preserve progress in curbing inflation since late 2023 and throughout 2024.
Impact on the Financial Sector
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Monetary easing has lowered the interbank rate from 8.2% in Q4 2023 to 6.7% in Q4 2024. However, commercial banks have yet to pass these benefits to borrowers. The lending rate remains high at 15.8% in Q4 2024.
Inflation and Growth Forecasts
The central bank revised its 2025 inflation forecast from 5% to 6.5%. It expects inflation to fall to 4.1% in 2026. However, geopolitical risks and agricultural performance remain concerns.
Chief Economist Thierry Kalisa noted that economic growth for 2024 will likely exceed the 8.3% estimate. Market dynamics are driving this increase. Similar growth patterns are expected for 2025 and 2026.
By keeping its policy rate steady, the National Bank of Rwanda aims to balance inflation control with economic stability and long-term growth.
