Rwanda's central bank maintained its key repurchase rate at 6.5 percent, saying it would maintain its current accommodative monetary policy stance "with the objective of continuing to support the financing of the economy by the banking sector, as long as inflationary pressures remain subdued."
The National Bank of Rwanda (BNR), which cut its rate by 50 basis points last year, said following the quarterly meeting of its Financial Stability and Monetary Policy Committees that the financial sector remains "sound and resilient" with the banking sector's return on assets up to 1.9 percent by end-December 2014 from 1.5 percent end-December 2013.
After slowing in 2013, Rwanda's economy recovered last year, growing by 7 percent compared with 4.7 percent in 2013.
"In 2015, the accommodate monetary policy is expected to continue supporting the financing of the economy through the banking sector," the central bank said on March 26.
Rwanda's headline inflation rate eased to 0.7 percent in February from 1.4 percent in January, said the bank which tracks urban inflation, attributing this to lower international commodity prices and good agriculture.
But despite this trend, the bank said pressure to the outlook for inflation may come from uncertainties in international commodity prices, food prices and the exchange rate.
"However, these risks are not expected to drive inflation on the extreme upside," it said.
The central bank's governor, John Rwangombwa, told journalists that inflation was not expected to exceed 3.5 percent by the end of this year, according to Reuters.
Rwanda's franc slumped sharply earlier this month, almost hitting 718 to the U.S. dollar, but the central bank said it intervenes to smoothen excessive volatility.
In 2013 the FRW depreciated by 6.1 percent against the dollar, then by 3.6 percent last year. As of today, the bank said franc has depreciated by 1.87 percent, the bank said. It ended the week at 685 to the dollar.