Rwanda’s central bank hikes its policy rate to 8.25% over inflationary pressures
The Monetary Policy Committee of the National Bank of Rwanda Thursday announced a raise of the central bank rate by 100 basis points to 8.25% to help bring inflation back to the target in the medium term.
Addressing reporters in Kigali, Rwandan capital, the Central Bank Governor Soraya Hakuziyaremye said the increase was in response to rising inflation and increased risks to the outlook.
Hakuziyaremye said the committee’s decision showed the bank’s commitment to price stability, crucial for the broader macro-economic stability and purchasing power of households.
In February, the central bank rate was increased by 50 basis points to 7.25 percent as part of efforts to contain inflation.
In a statement, the bank said the rate “hike coupled with additional measures by the government to mitigate inflation pressures will also help bring inflation back to the target of 5 percent over the medium term.”
In the first quarter of 2026, Rwanda’s headline inflation rose to 9.1 percent from 7.4 percent in fourth quarter last year, driven by increase in core, fresh food and energy prices, according to the central bank.
More recent data from the central bank showed that inflation rose to 13.0 percent in April from 9.2 percent in March, moving further above the upper bound of the inflation target range of 2 to 8 percent.
The statement showed that the central bank revised the 2026 inflation outlook upwards with average inflation now projected at 13.9 percent from 9.4 percent forecast in February.
It said the change reflects both external and domestic factors, including the impact of the Middle East conflict on energy products such as fuel and gas, and higher transport costs caused by rerouting after the closure of the Strait of Hormuz.
Headline inflation is expected to remain above the upper bound of 8 percent until the second quarter of 2027, before gradually easing towards the 2-8 percent target band by the end of 2027.
Risks to the inflation outlook remain, mainly stemming from the Middle East war, adverse weather conditions that could further constrain agricultural production and continued pressures on global shipping and energy costs, the bank added.
According to the central bank, Rwanda’s economy continued to exhibit strong growth momentum in 2025 supported by broad-based activity across sectors.
Real gross domestic product (GDP) grew by 9.4 percent in 2025.
This positive momentum, it said, is expected to continue in the first quarter of 2026 driven by solid performance in wholesale and retail trade, transport, financial services, manufacturing, mining and construction.
