The National Bank of Rwanda
The Central Bank Monetary Policy Committee has announced an increase in the repo rate for the third quarter of this year to 7.5% with anticipation that the factors around the current inflation will be addressed especially on the global market.
The previous repo rate announced in the 2nd quarter (May 2023) was 7.0% and this has increased for the past three years due to factors of global inflation as a result of the crisis in Ukraine and climate change.
Overall global inflation is projected to decline lower to 6.8% this year compared to the previously projected 8.7% in 2022; while in the Sub Saharan Africa (SSA) region it is projected to slightly decrease to 14.5% compared to 14.5% in 2022.
Central Bank Governor, John Rwangombwa said that the decision to increase the repo rate by 0.5% was to ensure that the inflation is managed with plans to normalize the economy.
Rwangombwa said that the projection is to have inflation reduced by the end of the year, however the forecast faces some uncertainties such as geopolitical and unpredicted climate change despite inflation continuing to go down—all areas-core inflation, in energy, food.
“This decision is to have control over these uncertainties. even if we have a problem with the transition of the decision into the economy we will manage,” Rwangombwa said.
“The inflation curve is reducing and by the end of the year we will have below 8% inflation and next year we will have it at 5%.”
Amidst dealing global financial shocks, Rwangombwa also showed that Rwanda’s economy has been growing since 2021 and with a current 9.2% growth in the 1st quarter of 2023, there is a strong recovery (in GDP) despite a slowdown in Composite Indicator of Economic Activity (CIEA) from 14.8% to 6.3% (from the 1st to the 2nd quarter).
“The message here is that the economy is still on a strong recovery path expected to register the 6.2% that is projected for this year,” he stated.
Central Bank Chief economist, Thierry Kalisa explained that the increase is an assurance to have the inflation level come down and
Deputy Central Bank Governor, Soraya Munyana Hakuziyaremye said that the repo market is active and working well with local banks and depending on the liquidity on the market the Central Bank does repo or reverse repo on a weekly basis.
