To stabilise the slowdown in consumer prices in the Rwandan market over the past few months, the National Bank of Rwanda has decided to maintain its lending rate to commercial banks at 7.5 per cent.

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It last decided to maintain the policy rate at 7.5 per cent in November 2023, which was increased from 7 per cent in August.

The decision was announced on Thursday, February 22, during the release of the quarterly Monetary Policy Committee update, a review of recent global and national economic developments as well as 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 balancing of liquidity in the banking system intending to stabilise the economy.

The central bank Governor John Rwangombwa said that maintaining the policy rate is in line with being ‘prudent’ to protect the good development in inflation that has reduced just for a few months now and avoid the rush to reduce the rate while potential risks remain.

However, he mentioned: "We might start reducing the policy rate in the next quarter rounds depending on how these economic variables behave going forward, but for now, we are maintaining it to stabilise the prices to be sure that we are on the right track.”

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Based on figures from the National Institute of Statistics, inflation has maintained a downward trend to 5 per cent in January mainly due to reduced prices of fresh food in the domestic economy as agricultural seasons’ performance improved.

Since November 2023, consumer prices started to fall back within the National Bank of Rwanda (NBR) target range between 2 per cent and 8 per cent in December 2023 and averaged to the desired percentage of 5 per cent in January 2024.

Overall, the decline in inflation is attributed to the monetary policy tightening decision taken, government-incentivised measures, farmers’ mobilisation for agriculture season A, and falling prices of major international commodities.

Rwangombwa mentioned that Rwanda’s economic growth for 2023 is expected to be higher than the previous projection of 6.2 per cent. The economic growth figures are yet to be released.