Rwanda Central Bank Cuts Key Interest Rate to Record Low of 5%

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Rwanda’s central bank reduced its benchmark interest rate to a record low to sustain growing domestic demand.

The bank’s Monetary Policy Committee cut the rate by 50 basis points to 5 percent, Governor John Rwangombwa said in a statement handed to reporters Monday in the capital, Kigali.

The landlocked East African nation has experienced deflation in food prices because of improved agricultural output. The bank sees the headline inflation rate rising to 3 percent by the end of the year from an average of 1.4 percent in 2018, the governor said.

The bank in March introduced inflation targeting, seeing price growth in a range of 2 percent to 8 percent, and preferring it at about 5 percent.

The economy expanded 8.6 percent last year, and will probably grow 7.8 percent this year, he said.

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