In its quarterly Meeting held on 24th March 2010 at the National Bank of Rwanda Headquarters, the BNR Monetary Policy Committee (MPC) decided to review downward its Policy Interest Rate (Key Repo Rate), from 7.5% to 7.0% to be in force during the second Quarter 2010.
This review is coherent with current macroeconomic environment, characterized by low and stable inflation, as it fell from 5.7% in December 2009 to 2.5% in February 2010 on annual basis, as well as the continuing building up of banking system liquidity.
Indeed, while the BNR monetary policy ultimate objective remains to maintain the price stability, this new reduction of the KRR will further stimulate banks to improve their lending conditions, necessary for speeding up the current slow economic recovery, from weak performance recorded in 2009.
The current downward KRR review does not jeopardize the domestic savings mobilization strategy, as the interest rates are kept positive in real terms while continuing to lower the cost of funds for the banking system.
In view of this decision, the Central Bank expects an improvement in the credit conditions as the cost of funds declines while the banking liquidity remains sufficient. Indeed, this decision is of great benefit to both the banking system and private sector.