Rwanda’s Central Bank maintains key repo rate at 5%

Rwanda’s National Bank has made the decision to maintain the key repo rate at 5%, after previously increasing it by five basis points at the last Monetary Policy Committee reading. In a recent interview with CNBC Africa, Governor John Rwangombwa discussed the rationale behind this decision amidst challenging economic times marked by uncertainty and inflationary pressures. He mentioned that while global and domestic inflation rates are currently high, the bank expects them to decrease over the next year, citing factors like global demand and domestic policies as key drivers for this anticipated decline. Rwangombwa expressed cautious optimism regarding the economic outlook, acknowledging the impact of events like the Russia-Ukraine crisis on future projections. The governor emphasized the importance of targeted subsidies by the government to cushion vulnerable segments of the population from the effects of rising commodity prices. Additionally, he touched on the anticipated recovery of various sectors in the Rwandan economy, with services, industry, and agriculture all showing signs of improvement. Despite challenges facing the financial sector, Rwangombwa expressed confidence in its stability and contribution to economic growth. He highlighted the need for microfinance institutions to address governance and operational issues to ensure sustained growth and improved lending practices.