The headquarters of the National Bank of Rwanda, Rwanda’s central bank, in the Nyarugenge district of Kigali, Rwanda on Thursday, July 20, 2023. The World Bank cut Rwanda’s GDP growth estimate to 5.8% from 6.2%, as it expected flooding during April and May to result in slowed economic expansion. Photographer: Bing Guan/Bloomberg via Getty Images

KIGALI, Aug 21 (Reuters) – Rwanda’s central bank lowered its key interest rate by 50 basis points to 6.5% on Wednesday, its second cut in a row, saying inflation was projected to remain within its target band at around 5% on average.

The decision follows a 50 basis point cut to the National Bank of Rwanda’s Central Bank Rate in May.

Annual inflation peaked at 21.7% in November 2022 and has remained under 6% since the start of this year. It dipped to 4.9% in July, well within policymakers’ 2%-8% target range.

“Inflation is expected to remain within our band and around our medium objective of 5% for this year 2024 and for next year 2025,” Governor John Rwangombwa told a news conference.

He added the bank’s monetary policy committee had the same inflation projections as at its May meeting.

On the economy, Rwangombwa said growth had been strong in the second quarter and was projected to remain so in the third quarter, building on the first quarter’s 9.7% growth.

Among inflation risks, Rwangombwa cited heightened geopolitical tensions affecting commodity prices and adverse weather conditions impacting food prices.

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(Reporting by Philbert Girinema; Writing by Hereward Holland; Editing by Alexander Winning and Christina Fincher)