Rwanda’s Central Bank Raises Key Rate to 7.25% to Contain Inflation

The National Bank of Rwanda has raised its benchmark interest rate by 50 basis points to 7.25 percent as policymakers move to restrain inflationary pressures in the short term, defying a wider trend of monetary easing across several African economies.

Governor Soraya Hakuziyaremye announced the decision following the Monetary Policy Committee meeting on Thursday, noting that the adjustment reflects the bank’s commitment to maintaining price stability.

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The latest increase is the most significant tightening step taken by the central bank since August 2023 and places Rwanda among the few countries on the continent still pursuing a cautious monetary stance while inflation begins to ease elsewhere.

In its policy communication, the committee stressed that it remains alert to inflation risks and will continue to act to keep price growth within its medium-term target band.

It added that subsequent policy decisions will depend on how economic risks evolve, particularly those that could push inflation higher than expected.

Hakuziyaremye said the committee would keep a close watch on economic developments and the inflation outlook, indicating that further adjustments could be introduced if necessary to ensure inflation returns to the bank’s target range of 2–8 percent over time.

On the currency front, she noted that the Rwandan franc weakened by 4.4 percent against the U.S. dollar as of December 2025, representing a slower depreciation compared with the 9.42 percent decline recorded during the same period in 2024.

She attributed the relative stability to stronger tourism receipts, rising remittance inflows, and improved external sector performance, which helped ease pressure on foreign exchange markets.

The governor also pointed to ongoing domestic foreign-exchange reforms and a comparatively weaker U.S. dollar globally as additional factors supporting the currency.

The policy move highlights the central bank’s cautious strategy as it seeks to balance inflation control with broader economic stability.