The National Bank of Rwanda (BNR) has increased its Central Bank Rate (CBR) by 25 basis points, moving it from 6.5% to 6.75%, in a bid to curb inflationary pressures and maintain macroeconomic stability. The new rate will apply for the next three months.
According to the Monetary Policy Committee (MPC), inflation in the second quarter of 2025 remained within the expected range of 2–8%. Projections indicate an average of 7.1% in 2025 before easing to 5.6% in 2026. However, risks such as adverse weather conditions, international trade uncertainties, and fluctuations in global commodity prices could still affect inflation trends.
Strong Economic Performance Amid Global Challenges
Rwanda’s economy recorded robust growth in the first half of 2025, with real GDP reaching 7.8%. This was largely driven by strong performances in the services and industry sectors, alongside steady growth in agriculture.
High-frequency indicators also showed continued momentum in the second quarter, with the Composite Index of Economic Activity (CIEA) rising 12.5% year-on-year, largely supported by strong financing from the banking sector.
Trade Deficit Narrows as Exports Surge
BNR reported a significant improvement in Rwanda’s trade performance. In Q2 2025, merchandise exports grew 15.5%, boosted by mineral and coffee exports, as well as non-traditional exports like cooking oil and wheat flour, which jumped 31.1%.
Re-exports, however, declined 13.2% due to reduced demand in the region. On the import side, merchandise imports rose moderately by 3.3%, mainly because of higher food and raw material demand. Overall, Rwanda’s trade deficit narrowed by 2.9 percentage points compared to the same period in 2024.
Exchange Rate and Interest Rates Show Stability
The Rwandan Franc depreciated by 2.96% against the U.S. dollar by mid-2025, an improvement compared to a 3.73% depreciation in 2024. This was partly supported by stronger trade performance.
Meanwhile, money market rates fell in line with the CBR adjustments. The interbank rate dropped to 6.31% from 8.14% in 2024, while deposit rates fell to 9.75%. Average lending rates for both individuals and corporates declined to 15.97%, down from 16.25% in 2024.
Inflation Outlook
Headline inflation stabilized at 6.7% in Q2 2025, unchanged from the previous quarter. Core inflation eased to 5.6%, while fresh food inflation rose due to seasonal supply patterns. Energy inflation also ticked higher, mainly from solid fuels.
Despite short-term pressures, BNR projects that headline inflation will remain within the target band, averaging 7.1% in 2025 before declining to 5.6% in 2026.
The Monetary Policy Committee has decided to increase the central bank rate by 25 basis points to 6.75%, a level considered adequate to keep inflation within the target range, with forecasts averaging 7.1% in 2025 and 5.6% in 2026. The MPC will continue to monitor global and domestic economic developments and stands ready to take appropriate action to ensure price stability.
