Rwanda's central bank cut its repo rate by 50 basis points to 7.0 percent to stimulate lending and economic growth in light of inflation that is expected to remain moderate in the third quarter.
The National Bank of Rwanda (BNR), which last raised its rate in May 2012, said the unfavourable international environment is expected to slow down economic activity in the first half of this year compared with 2012, while the exchange rate has remained stable.
Rwanda's headline inflation eased to 2.98 percent in May from 4.4 percent in April and the BNR said it expected inflationary pressures to remain moderate in the third quarter.
"However, BNR will continue to closely monitor developments in underlying factors of inflation and exchange rate volatility so as to take timely appropriate measures," the central bank said in a statement following a meeting of the bank's monetary policy and financial stability committees on June 18.
Rwanda's financial sector continues to perform well, the bank said, with capital adequacy ratios of 24.6 percent as of March, exceeding the minimum requirements of 15 percent, and adequate liquidity.
Last month the governor of the BNR said rates would probably be kept unchanged this year as long as inflation remained below 10 percent and better harvests support growth.