Central bank maintains interest rate at 7 pc, predicts solid growth

The National Bank of Rwanda will maintain lending interest rate to commercial banks at 7 per cent, a relatively hard stance meant to contain inflation, the Governor, Amb Claver Gatete said. Higher lending rates can reduce credit growth, allowing the monetary system to rebalance.“We want the economy to grow on a solid ground… and fighting inflation is our key mandate,” said - central bank Governor Amb Claver Gatete, during a news briefing in Kigali, Friday.Rwanda’s annual inflation went up slightly to 7.85 percent this month, from 7.81 percent a month earlier.Food and drink makes up almost two-thirds of the basket, hitting 9.83 percent in February, up from 8.28 percent in January.The central bank in its Monetary Policy Committee of the second quarter, said the decision is based on the global food prices which are cooling, stabilising inflationary pressures in the region and domestic macroeconomic stability.“Generally, there is a positive gesture and we are comfortable where we are; however, for oil the situation is uncertain, the situation is still fluid…it can go anywhere and we are monitoring,” Amb Gatete said.He explained that inflation is coming from the supply and not demand side and this is where the policy will focus.Rwanda’s economy is expected to grow by 7.6 per cent and the central bank says they are committed to closely monitor challenges in the international, regional and domestic economic environment to take timely and appropriate measure to have a balancing act.“We are optimistic; inflation is still single digit and declining. Compared to where we were, last year, we are seeing good progress and business is continuing as expected,” Gatete said.According to central bank, the monetary and exchange rate policy implemented to date continues to sustain Rwanda’s macroeconomic stability, and that they will continue to ensure that exchange rate is market driven.“BNR will only intervene on the domestic foreign exchange market to smoothen the exchange rate volatility,” reads an official statement from the bank.

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Central bank maintains interest rate at 7 pc, predicts solid growth