Rwanda’s Central Bank Cuts Benchmark Rate to Record Low
Rwanda’s central bank reduced its benchmark interest rate for the first time in about a year and lowered cash reserve requirements for banks to stimulate output amid the Covid-19 shock to the economy.
The National Bank of Rwanda lowered the lending rate to 4.5% from 5%, according to an emailed statement. It was last cut in February 2019 by 50 basis points.
- Inflation could average 6% this year, slower than 8.2% in the second quarter, central bank Governor John Rwangombwa said in a phone interview after the rate decision. Price-growth will slow on account of the coronavirus pandemic reducing aggregate demand.
- A cut in the reserve requirement last month released 23.4 billion francs by the start of April, the central bank said. Another 50 billion francs credit facility is also available for lenders at the central bank rate, it said.
- By April 10, banks had restructured loans worth 255 billion francs, according to the statement.
- The government expects economic growth to slow to 3.5% this year from an earlier projection of above 10%. The state is seeking to delay some debt repayments for about two years to conserve cash, President Paul Kagame said on Monday. The government is seeking debt relief from multilateral and bilateral institutions, not private lenders, according to Rwangombwa.
- The East African nation is among the 11 countries that will receive part of the $11 billion that the International Monetary Fund plans to disburse to fight the pandemic.
- Read more: National Bank of Rwanda Key Repo Rate History (Table)
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