Rwanda’s central bank has raised its lending rate by 100 basis points, the biggest increase in recent years, to 6.0 percent to stem rising inflation.
On Thursday, the National Bank of Rwanda (BNR) rate-setting Monetary Policy Committee (MPC) noted that inflation had hit 15.6 percent in July from 12.6 percent in the prior month, well above the 0.8 percent average rate recorded last year.
The central bank attributes the sharp rise to imported fuel costs and the poor harvest due to unfavourable weather and increased prices of imported agricultural inputs. Inflation is a measure of annual changes in the cost of living.
“This (inflation) is a big concern for us. We are talking to other government agencies to intervene. Inflation is expected to remain high over the next three quarters and start easing in the second half of 2023 when the headline inflation converges towards the five percent benchmark,” BNR Governor John Rwangombwa told a press briefing on Thursday after the MPC meeting.
The uptick in inflation is expected to undermine the country’s economic growth prospects, projected to drop to six percent, down from 10.2 percent registered in 2021.