The National Bank of Rwanda’s decision to maintain its key repo rate at 6.75 per cent may appear predictable, but the implications are anything but trivial. At a moment when global conditions are improving yet remain uneven, this choice could prove decisive in setting the trajectory of inflation inthe near future. On one hand, the Bank’s confidence is not unfounded. Inflation remains within the 2–8 per cent target band, edging up only slightly to 7.2 per cent in the third quarter. Global pressures, from declining energy prices to easing food costs, are shifting in Rwanda’s favour. The IMF projects global inflation to drop to 4.2 per cent next year, a disinflationary trend that should help contain imported price pressures. Domestically, export performance is strong, foreign exchange reserves are healthy, and the franc’s depreciation has slowed markedly. These conditions offer a cushion, reducing the urgency for further tightening. Moreover, economic growth is gaining momentum. GDP expanded by 7.8 per cent in the second quarter, while business activity indicators remain robust. Keeping the policy rate unchanged preserves borrowing conditions for firms and households, especially as lending rates only adjust with a lag. For a country pursuing structural transformation and export diversification, preserving access to credit matters. Yet a balanced outlook requires acknowledging the risks, and they are real. Inflation is still near the upper end of the target band, and core and energy prices continue to exert pressure. While global commodity trends are favourable, domestic fuel costs remain elevated, and weather-related shocks pose persistent threats to food supply. External risks, from geopolitical tensions to volatility in regional markets, could quickly alter today’s benign picture. Holding the rate steady, therefore, is a calculated gamble. If favourable global trends continue and domestic growth holds, the decision will help anchor inflation without stifling economic activity. But if supply shocks intensify or imported pressures resurface, the Bank may find itself needing to act more forcefully. Ultimately, the MPC’s choice reflects cautious optimism. Whether this pause becomes a turning point toward sustained price stability, or a temporary calm before renewed volatility, will depend on how these risks unfold. For now, Rwanda has opted for steadiness, betting that discipline and favourable winds will keep inflation on its downward path.
