In its quarterly Meeting held on 16th July 2010 at the National Bank of Rwanda Headquarters, the BNR Monetary Policy Committee (MPC) decided to maintain unchanged its Policy Interest Rate (Key Repo Rate) at 7.0% to be in force during the third Quarter 2010.
This decision is consistent with the current macroeconomic environment characterized by a low but increasing inflation, as it stood at 5.03 % in June 2010 from 2.05% in March on annual basis, as well as the sufficient level of liquidity in the banking system.
Indeed, while the BNR monetary policy ultimate objective remains to maintain price stability, this level of the policy rate gives a positive signal to banks to continue to support the lending activity to the economy.
The current level of KRR does not jeopardize the domestic savings mobilization strategy, as the real interest rates are kept positive.
In view of this decision, the Central Bank expects an improvement in the credit conditions as the cost of funds remains stable and the banking liquidity sufficient. Indeed, this decision is of great benefit to the banking system, private sector and the economy as a whole.
In the first half of 2010, Rwandan Franc has slightly depreciated against the US dollar but appreciated against other major trading currencies such as EURO, GBP, and EAC currencies. Overall, RWF appreciated vis-a-vis the currencies of Rwandan trade partners. The dollar appreciation has now reached the peak and other major currencies have started appreciating against the USD. During the third quarter 2010, BNR's exchange rate policy will be to maintain stable real effective exchange rate.