Rwanda Central Bank has lowered the benchmark interest rate by 60 basis point to 6.5% in a move it says will stimulate lending and boost economic activity in the Country.
The Central bank Governor John Rwangombwa announced the interest rate shortly after a meeting of the bank’s Monetary Policy Committee. Interest rate is the rate at which the Central Bank lends to commercial banks in the country.
It is used to determine the cost of borrowing in the country. By lowering the rate, the Central bank intends to make cost of borrowing cheaper for businesses and individuals. This would stimulate lending, boost access to capital and improve the economy. Also, the upward or downward review of the rate will allow the regulation of liquidity in the banking sector
On the issue of inflation, Rwanda’s CBN governor said the current inflation rate is still within the central bank target of 2-8 percent.
Also, he said the inflation rate is within the bank’s medium objective of 5 percent, despite a slight increase to 5.1 per cent from 4.7 in the first quarter of 2024. He noted that the slight increase in inflation was driven by the high cost of transport and rising cost of cars in the country.
In addition, Rwangombwa said the inflation is also driven by geopolitical tensions and adverse weather conditions affecting food prices and production in the country.
Speaking further, Rwangombwa also pointed out that Rwanda has been seeing a drop in inflation figures, despite the high numbers in Zimbabwe, Angola, Ethiopia and other African countries.
On the economy, Rwangombwa said Rwanda’s growth had been strong in the second quarter. The growth is expected to continue in the third quarter of 2024.
