Karungi Doreen
The National Bank of Rwanda has raised its main interest rate from 6.25 percent to 7.25 percent in a bid to control rising inflation and ensure economic stability in the medium term.
The move was approved by the Monetary Policy Committee after considering the domestic and international economic environment. The central bank noted that headline inflation had risen to 7.4 percent at the end of 2025 before rising further to 8.9 percent in January 2026, above the target range of 2 to 8 percent.
The central bank said that the rising inflation has been fueled by rising costs of energy, electricity, fuel products, and vegetable prices, which were influenced by adverse weather conditions that resulted in low agricultural production.
Despite the challenges posed by inflation, the economy of Rwanda has continued to grow at a high rate, averaging 8.7 percent in the first nine months of 2025 compared to 7.2 percent in 2024. Exports rose by 14.1 percent, led by coffee and mineral exports, although the trade deficit widened due to a rise in imports.
The value of the Rwandan franc fell by only 4.4 percent against the US dollar in 2025, which is a lower rate compared to the previous year, due to tourism earnings and remittances from abroad.
According to the central bank, the rate increase will support the management of inflationary pressures and bring inflation back to the target range over the medium term, although it is expected to remain slightly above 8 percent in the first half of 2026 before easing at the end of the year.
