Dr. Soraya Munyana Hakuziyaremye, The BNR Governor says Rwanda’s financial sector remains sound, well-capitalized, and resilient.
Kigali, Thursday — The National Bank of Rwanda (BNR) has raised its benchmark interest rate by 50 basis points to 7.25%, signaling a firmer stance against rising inflation even as the economy posts one of the region’s strongest growth rates.
Price stability remains a priority
The move was announced by Dr. Soraya Munyana Hakuziyaremye, BNR Governor, while presenting outcomes from the recent Monetary Policy Committee (MPC) and Financial Stability Committee (FSC) meetings. She said the decision reflects a careful balance between safeguarding price stability and maintaining the momentum of an economy that grew 8.7% in the first three quarters of 2025.
Headline inflation climbed to 7.4% in the fourth quarter of 2025 and rose further to 8.9% in January 2026, slightly above the bank’s 2–8% target range. Core inflation reached 9%, while energy inflation surged to 12.4%, driven by higher electricity tariffs and fuel prices.
Although fresh food inflation eased, rising costs in housing, hotels, restaurants, and other services kept overall pressures elevated. The MPC now expects inflation to remain slightly above target in the first half of 2026 before easing in the latter half.
“In view of persistent inflationary pressures and the upward revision of the inflation outlook, the Committee decided to increase the Central Bank Rate,” Dr. Munyana Hakuziyaremye said, emphasizing the move is aimed at protecting household purchasing power.
Growth remains strong
The rate hike comes amid robust domestic activity. Rwanda’s economy grew 8.7% in the first three quarters of 2025, driven by services and industry. Sectors such as trade, transport, ICT, finance, manufacturing, construction, and mining all contributed to growth.
The bank’s composite index of economic activity rose 17% in the fourth quarter, suggesting full-year growth likely surpassed 2024’s 7.2%. Exports increased 14%, boosted by a 69% surge in traditional exports, including coffee and minerals. Non-traditional exports and re-exports also posted double-digit growth.
Although imports rose, the trade deficit widened only modestly. The Rwandan franc depreciated just 0.4%, a marked improvement from previous years.
Financial sector remains resilient
The FSC concluded that Rwanda’s financial sector remains sound, well-capitalized, and resilient. Total financial sector assets rose 24% to reach RWF 15.9 trillion, with banking assets up 22.7%, microfinance institutions expanding 22.9%, and the pension sector surging 35.3%.
Credit growth was strong, with outstanding loans increasing 25%, though lending remains concentrated in trade, construction, personal loans, and manufacturing. Agriculture continues to receive a small share. Non-performing loans fell to 2.5%, while capital adequacy and liquidity remain solid.
The digital payments ecosystem also grew, with retail payment values reaching RWF 77 trillion in 2025, reflecting rising adoption of electronic transactions.
Looking ahead
The central bank acknowledged that households and businesses still face price pressures, particularly for food, electricity, and fuel. Policymakers, however, expect inflation to moderate as supply conditions improve and earlier price adjustments ease.
BNR will continue monitoring risks from agricultural output, energy prices, credit concentration, cyber threats, virtual assets, and geopolitical tensions. The latest rate hike underscores that economic expansion is intact, but maintaining price stability remains the top priority.
