The National Bank of Rwanda’s (BNR) monetary policy committee has decided to maintain its policy interest rate for the third quarter of the year at 7 percent due to a current macroeconomic environment.
The key repo rate is a rate at which the Central Bank lends to commercial banks and the higher the rate the more it is likely to reduce the liquidity in the banking system.
“The decision is based on the current macroeconomic environment characterized by a low but increasing inflation,” said Francois Kanimba the governor of the central bank.
In the second quarter of the year, the national bank which is the regulator of the banking system in the country revised down the rate by 2.5 percent from 9 percent to 7.5 percent.
Official statistics puts inflation rate by end of June at 5.03 percent from 2.05 percent in March on an annual basis.
Kanimba also stressed that the central bank expects an improvement in the credit conditions as the cost of funds remains stable and the banking liquidity sufficient.
“Indeed this decision is of great benefit to the banking system, private sector and the economy as a whole,” said Kanimba.
With the global economy recovering, Rwandan economy for the last six months has been growing impressively especially in services, construction as well as exports growing by 25 percent compared to last year same time.
The BNR official said that although the monetary policy objective remains to maintain price stability, this level of the policy rate gives a positive signal to banks to continue supporting the lending activities to the economy.
The monetary committee also noted that in the first quarter of 2010 the Rwandan Franc slightly depreciated against the US dollar but appreciated against other major trading currencies such as the Euro, Great Britain Pound and the regional currencies.