Rwanda central bank holds key rate steady as inflation seen within target

By Philbert Girinema

KIGALI (Reuters) -Rwanda's central bank held its key interest rate at 6.5% on Thursday after cutting it at the previous two rate-setting meetings this year.

Governor John Rwangombwa told reporters that the decision was based on uncertainty over the performance of the agriculture sector and that the central bank felt inflation could be kept within its 3%-8% target range.

"We think for now (the rate) is good enough to maintain inflation within our band," he told a news conference.

Annual inflation has remained under 6% this year and stood at 3.8% in October.

Rwangombwa said the East African country's economy had remained strong in the third quarter thanks to the services and industry sectors and that inflation would average around 4.6% in 2024.

The bank has raised its average inflation forecast for next year to 5.8%, from 5%, because of the impact of adverse weather conditions on farming.

"We expect to see some pressures on food prices, and therefore that has led us to increase (our) projection of inflation for 2025," he said.

Thursday's decision follows a 50-basis-point cut to the National Bank of Rwanda's Central Bank Rate in August, and a similar-sized cut in May.

(Writing by Hereward Holland; Editing by Alexander Winning and Bernadette Baum)

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