The National Bank of Rwanda lowered its key interest rate by 50 basis points to 7 per cent from 7.5 per cent, noting that inflation was projected to remain within its target band at around 5 per cent this year and in 2025.Until August 2023, the Central Bank had increased the policy rate by 300 basis points in a long tightening cycle that was aimed at containing high inflationary pressures.
The decrease in core inflation was mainly driven by the deceleration of core food inflation, resulting from the downward trend in international prices of key processed food items such as rice, sugar, and corn flour. "The expected stable inflation path will be supported by easing food inflation in 2024, reflecting the expected decrease in international food prices as well as the normalisation of domestic agricultural production," the governor said.
"This high growth momentum is expected to continue as demonstrated by the performance of high-frequency indicators, including the Composite Index of Economic Activities , which grew by 8.6 per cent in the first quarter of 2024," Rwangombwa noted. "By the end of March 2024, the Rwandan franc had depreciated by 2.08 per cent against the US dollar, lower than the 3.07 percent depreciation recorded in the same period last year," the governor said in a presentation.