Rwanda’s Central Bank optimistic of economy picking up

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PHOTO/NewTimesRwanda
PHOTO/NewTimesRwanda

Rwanda’s Central Bank has maintained the Key Repo Rate at 4.5 per cent to encourage continued lending by banks to the private sector and individuals.

This followed the quarterly Monetary Policy Committee (MPC) meeting, held on Wednesday, August 12 to review recent economic developments globally and nationally as well as potential interventions

The central bank in its statement signed by Governor John Rwangombwa expressed optimism that the Rwandan economy will pick up in the second half as evidenced by the Composite Index of Economic Activities which showed increased activity in the local economy.

The key repo rate is the maximum rate at which commercial banks invest their money at the central bank.

The Central Bank in April revised downwards its Key Repo rate from 5 per cent to 4.5 per cent with an aim to spur lending to the private sector to support economic recovery following the pandemic.

By leaving it relatively low, it leads banks to consider lending to the market which will consequently drive economic recovery. Increased supply and appetite to lend among banks could consequently lead to a reduction in rates.

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