The Monetary Policy Committee (MPC) of the National Bank of Rwanda (BNR) has increased the central bank policy rate by 100 basis points to 8.25% in response to rising inflation. The decision was announced by the Central Bank Governor Soraya Hakuziyaremye on Thursday, May 21, following the committee meeting to review recent developments. The committee had increased the rate by 50 basis points to 7.25 per cent in February. ALSO READ: Central Bank raises key interest rate by 50 bps to reign in inflation Hakuziyaremye said the committee’s decision to raise the key interest rate by one percentage point was informed by expectations that inflationary pressures will intensify this year. In the first quarter of 2026, headline inflation rose to 9.1 per cent from 7.4 per cent in the fourth quarter of 2025, driven by increases in core, fresh food, and energy prices. More recent data show that price pressures have strengthened further. Inflation rose to 13 per cent in April from 9.2 per cent in March, moving further above the upper bound of the inflation target range of 2 to 8 per cent. As a result, the 2026 inflation outlook has been revised upward. ALSO READ: How will central bank’s rate hike tame inflation? Average inflation is now projected at 13.9 per cent, higher than the 9.4 per cent forecast in February 2026. “This revision reflects both external and domestic factors, including the impact of the Middle East conflict on energy products such as fuel and gas, as well as higher transport costs caused by re-routing following the closure of the Strait of Hormuz,” BNR stated. Over the medium term, headline inflation is projected to average 13.9 per cent in 2026 before falling to about 7.4 percent in 2027. MPC decision The central bank said that its decision to hike the rate is likely to bring inflation within the 2–8 per cent target band next year and towards the 5 per cent objective over the medium term. “The decision to increase the CBR is a measured step to bring inflation within our target band to safeguard price stability, which is a necessary condition to sustain economic growth,” the governor said. However, she indicated that lower agricultural production and a prolonged war in the Middle East are key risks to the outlook. In February this year, the committee had increased the rate by 50 basis points to 7.25 per cent as inflation continued to rise. As a result, the interbank market rate, the rate at which commercial banks lend and borrow short-term funds from one another, increased to 7.13 per cent in the first quarter of 2026, up from 6.77 per cent in the same period of 2025.
