Rwanda’s Central Bank says it has decided to maintain its lending rate at 5.5%, following stable economic performance.
This means that Financial Institutions in the country will continue to enjoy lending rate which has persisted for the last 8 months.
“Policy on repo rate is accommodative enough to allow banks to give loans,” Central Bank Governor John Rwangombwa told journalists while presenting the latest figures on the Monetary Policy Committee (MPC) decisions on September 25, at Central Bank headquarters in the capital Kigali.
However, despite Central Bank maintaining the lending rate at a relative figure, financial Institutions remain adamant to offload cash to their clients.
But this, Rwangombwa said, could be due to other factors and not connected with Central Bank’s lending rate.
“There is enough liquidity. But low loan rates in banks could be from other factors such as high credit risks because of high non-performing loans,” he said.
The last high lending rate was at 6% and 6.25% in the months of September and June 2017.
Addressing the media, Central Bank Governor Rwangombwa said the economy could even perform better in the next period.
According to latest results, Rwanda’s overall economic outlook remained positive in the first half of 2018 – in which the economy grew by 8.7 percent on average, relative to 2.9 percent in the same period of 2017.
This, Governor Rwangombwa told journalists, was attributed to the fact that “inflation remains low and stable while exchange rate pressures are moderate.”
Inflation has been lowered at 2.5 percent average in the first half of the year and 2.1 percent in August this year, while core inflation dropped from 1.7 percent to 1.6 percent in the same period.
Going forward, Central Bank predicted in its indicators that the country’s economic activity will continue to perform well in the second half of 2018 – basing on the Composite Index of Economic Activities (CIEA) which grew in real terms by 14.6% in the first two months of the third quarter of 2018, relative to 13.1% in the same period of 2017.