Rwanda’s central bank has tightened monetary policy for the third time this year after inflation accelerated to 14.5% in July, well above its target range.
The National Bank of Rwanda raised the Central Bank Rate by 50 basis points to 8.75% from 8.25%, following a meeting of its Monetary Policy Committee on Aug. 26.
The latest increase follows earlier rate hikes that lifted the policy rate to 7.25% in February and 8.25% in May, as the central bank responded to mounting pressure on consumer prices.
Inflation averaged 13.2% in the second quarter of 2026 before rising to 14.5% in July, driven largely by higher food and energy prices.
BNR Governor Soraya Hakuziyaremye said the latest decision was intended to slow inflation and prevent it from remaining outside the 2% to 8% range considered consistent with sustainable economic growth.
“The decision was taken to help reduce the pace of inflation and prevent it from remaining outside the 2% to 8% range that the country considers consistent with sustainable economic growth,” she said.
The higher policy rate is designed to curb inflationary pressure by making borrowing conditions tighter when demand for goods and services is rising faster than available supply.
Hakuziyaremye, however, said the previous rate increase had not led to a decline in lending. Loans issued by banks and microfinance institutions increased by more than 22% during the first six months of 2026.
“The first point I would like to clarify is that when we raised the policy rate in May, lending did not decline,” she said.
BNR has revised its average inflation forecast for 2026 to 13.1% from 13.9%, but expects inflation to remain above its target range through the year before gradually returning to the 2% to 8% band in the second half of 2027.
The monetary tightening comes as Rwanda’s trade activity continues to expand.
Merchandise exports rose by 51% in the second quarter, supported mainly by mineral exports and favourable prices on international markets. Other exports increased by 39.4%, driven by products including processed cooking oil, cement and wheat flour, while re-exports rose by 26%.
Imports increased by 28%, led by higher purchases of food products, including crude cooking oil and rice, as well as construction materials, beauty products and telecommunications equipment.
The central bank said it would continue to monitor domestic and global economic developments and use monetary policy measures to contain inflation while supporting sustainable economic growth and protecting consumers’ purchasing power.
