In continued efforts to tame inflation, the National Bank of Rwanda has decided to maintain its lending rate at 7.5 per cent.

It last took the decision to increase from 7 per cent to 7.5 per cent in August.

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The decision was announced on Thursday, November 23, during the release of the quarterly Monetary Policy Committee and Financial Stability Statement, a review of recent global and national economic developments and potential interventions.

Also known as the key repo rate, this is the fee at which the central bank lends to commercial banks. Adjusting it upwards or downwards allows the regulation of liquidity in the banking system with an aim to stabilise the economy.

Based on figures from the National Institute of Statistics, inflation has maintained a downward trend despite remaining high at 11.2 per cent in October. It is expected to decline towards the central bank range of 2 per cent to 8 per cent by the end of 2023 and average 6 per cent in 2024.

The decline is attributed to the monetary policy tightening, government incentivised measures, and falling prices of major international commodities.

At the global level, inflation is projected to reach 6.9 per cent at the end of 2023 and 5.8 per cent in 2024.

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Central bank Governor John Rwangombwa said that they expect to maintain this rate throughout next year to stabilise inflation, should nothing unusual happen.

He said the projections are made on the assumption that the country will have a normal agricultural performance and that there will be no geopolitical tensions effects on international commodity prices.

With the tightening of monetary policy over the previous quarters, Rwangombwa noted that they registered an increase in interbank rate – the interest rate at which banks lend money within themselves – from 6.05 per cent in the third quarter of 2022 to 7.99 per cent in the third quarter of 2023.

However, the lending rate fell from 16.17 per cent to 15.9 per cent in the period under review, as a result of an increased share of large loans with long-term maturity at relatively lower rates.