Central bank leaves repo rate unchanged at 6.5 pc

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Rwanda’s central bank decided against changing the key interest rates as the retail inflation continues to be above the comfort zone.

Rwanda’s central bank has kept its key repo rate at 6.5 per cent in a bid to tame the speed of price increases, the franc’s volatility and to stimulate lending.

John Rwangombwa, the National Bank of Rwanda governor told this website that the inflation is expected to slow down to 6 per cent while the franc is projected to depreciate further against the dollar by 9.8 per cent by the end of the year.

During the last eight months, the Rwandan currency depreciated by 8 per cent against the greenback.

The central bank governor revealed that inflation has remained above the central bank’s medium target of 5 per cent in the last three months rising to 6.4 per cent in August driven by increasing food prices as a result of the dry season.

The central bank has retained the repo rate at 6.5 per cent for over two years.

The economy has slowed down to 5.4 per cent in the second quarter of the year, but the government expects it to expand and hit the 6 per cent target in 2016.

While Rwanda grapples with rising inflation rate, it has remained moderate in other East African economies. In Uganda, the cost of living eased to 4.8 per cent in August from 5.1 per cent in July, Kenya 6.3 per cent from 6. 4 per cent while Tanzania 4.9 per cent from 5.1 per cent.

 

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