Friday, November 18, 2011

National Bank of Rwanda Lifts Rate 50bps to 7.00%

The National Bank of Rwanda increased its key repo rate 50bps to 7.00% from 6.50% previously, with the interbank interest rate corridor changing to 4.50-8.50% and the discount rate now 10.50%.  Bank Governor, Claver Gatete, said: "Rwanda's macroeconomic stability. The financial sector is sound and resilient to external shocks, the inflation remains moderate, the currency is stable and this has contributed to high economic growth expected to reach 8.8% by the end of the year. However, there still exist risks in the global economy that may affect Rwanda. This includes: the persistent debt crisis in the euro zone, the global high food and fuel prices and increasing regional inflationary pressures. This calls for preventive action to mitigate any negative impact on the Rwandan economy."

At its October meeting, the Bank also increased the repo rate by 50 basis points to 6.50% from 6.00%, meanwhile the bank last reduced the interest rate 100bps to 6.00% in November last year.  Rwanda has seen inflation pick up to 7.5% in August, compared to 5.82% in June, and just 1.09% in January this year.  According to IMF data Rwanda saw annual GDP growth of 5.39% during 2010, meanwhile the IMF recently scaled down its growth estimate for Rwanda to 7% for 2011, from a previous forecast of 7.5%.  

The Bank said that Rwanda has recorded broad money supply growth of 18% in the year to August, compared to a target of 16% for 2011.  The Rwandan Franc (RWF) last traded around 601.5 against the US dollar, having weakened about 1% so far this year.


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