African central bank governors discuss monetary policy
African central bank governors gathering in Kigali have called for robust mechanisms to address challenges facing the implementation of monetary policy framework to protect the continent against external shocks.
African countries are experiencing challenges to realise the framework because of evolving economies that come with internal and external shocks.
Participants attending the Rwanda central bank’s organised International conference on Monetary Policy Framework in developing countries will discuss and share experience about current practice on the monetary policy frameworks, challenges and responses to different shocks to keep inflation low and stable.
The conference is held under the theme; Practice and Challenges.
Inflation is the rate at which the general level of prices for goods and services rise, and, then reducing purchasing power.
Right Hon. Prime Minister Pierre Damien Habumuremyi who opened the meeting said experts should discuss how to be innovative and pro –active towards inclusive growth.
In attempt to stop severe inflation, Central bank will increase or the lending rate to commercial banks thus pushing interest rates will eventually slow credit to private sector.
“Efficient monetary policy should aim at developing financial sector because it’s still characterized by low volumes of credit,” he said.
It is expected that the conference will build consensus on which monetary policy framework is currently appropriate for developing countries.
Antoinette Sayeh Director of African Department in International Monetary Fund hailed Rwanda’s policies and urged other countries to learn from the country’s stable macroeconomic environment.
Last year, parts of the East African Community was hit by a severe food crisis and inflation shot high above 10 percent and only Rwanda contained it in single digit.
“The policies have made Rwanda such a great example in Sub Saharan Africa, however, the global economic out has not improved and the recovery is still uncertain,” she cautioned.
Amb. Claver Gatete emphasized that central banks need to focus on research and work closely with government to coordinate the supply side.
“Inflation also comes from agriculture, trade and fuel where government plays a key role, coordinating on the supply side has helped Rwanda to contain inflation in single digit,” Gatete said.
He however, acknowledged that all shocked could not be predictable and inflation reached 8.3 per cent last year.
He is optimistic that the conference will give a picture on global situation and the models used thus each country be able to select what could suit respective economies.
On a side interview with James Gatera Chief Executive Officer of Bank of Kigali stressed the need to invest more resources in research to be in a better position to analyse the situation.
“There has to be an intensive gathering of information on what is happening around the world, knowledge on specific countries if we are to mitigate the risks, because most of our inflation is imported,” Gatera said.
The two –day meeting was organised by the National Bank of Rwanda jointly with IMF, World Bank.