Rwanda raises key lending rate by 50bps

Rwanda's Central Bank has recently made the decision to raise the benchmark lending rate by 50 basis points to 7.5 per cent in an effort to curb rising inflation caused by surging food prices due to unfavorable weather conditions and increasing global tensions. The move comes as the level of inflation in the first quarter of the year soared to around 20.2 per cent, prompting concerns about the country's economic stability. In a recent exclusive interview with CNBC Africa's Julius Bizimungu, the Governor of the National Bank of Rwanda, John Rwangombwa, shed light on the factors driving this decision and the potential implications for the economy. Rwanda's economy has been facing several challenges, including unpredictable weather conditions and geopolitical tensions, which have exacerbated food inflation and put pressure on the country's overall economic performance. The Governor pointed out that these uncertainties have contributed to the inflationary pressures, necessitating a proactive approach to stabilize the economy. In response to the rising inflation, the Central Bank raised the lending rate to 7.5 per cent, signaling a cautious approach to manage economic risks. The decision to increase the lending rate is aimed at controlling inflation and maintaining price stability in the face of ongoing uncertainties. Despite the challenges posed by external factors, the Governor remains optimistic about the country's economic prospects and emphasizes the importance of maintaining a stable financial environment to support sustainable growth. The recent adjustment in the lending rate reflects the Central Bank's commitment to addressing economic challenges and ensuring stability in the financial sector. As Rwanda navigates through turbulent times, effective monetary policy measures are crucial to safeguarding the economy and promoting sustainable development. The Governor's insights provide valuable perspective on the current economic landscape and the steps being taken to mitigate risks and enhance resilience. By prioritizing price stability and proactive risk management, Rwanda aims to navigate through the challenging economic environment and foster long-term prosperity.