Rwanda’s Central Bank Holds Policy Rate at 6.5% in May 2025: What It Means for the Economy

On May 15, 2025, the National Bank of Rwanda (BNR) convened its Monetary Policy Committee (MPC) to assess the state of the national and global economy. At the conclusion of this highly anticipated meeting, the Bank announced its decision to maintain the Central Bank Rate (CBR) at 6.5%, a level that has now held steady since the third quarter of 2024. According to BNR Governor Soraya Hakuziyaremye, the decision reflects a deliberate balance between containing inflation and sustaining economic recovery. The Bank emphasized that current monetary conditions are supportive of achieving price stability without disrupting Rwanda’s post-pandemic growth trajectory (BNR, 2025a).

Inflation stood at 6.3% year-on-year in April 2025, slightly lower than March’s 6.5%, and well within the Bank’s inflation target range of 2% to 8% (BNR, 2025a). Projections indicate that average inflation for the remainder of 2025 will hover around 6.5%, with a marked deceleration expected in 2026, where inflation is forecast to ease to 3.9% (Reuters, 2025). This moderation is largely attributed to improved agricultural output, stable food prices, and an expected easing of external price pressures. The BNR believes that the 6.5% policy rate is adequate to anchor inflation expectations and guide the economy toward macroeconomic stability.

The Bank’s decision comes at a time of considerable uncertainty in the global economic environment. Rwanda, like many low-income economies, remains vulnerable to external shocks, particularly through the trade and financial channels. Persisting geopolitical tensions notably the ongoing conflict in Ukraine and instability in the Great Lakes region continue to disrupt global supply chains and exacerbate commodity price volatility. Rising oil prices and fluctuating global food markets have increased the risk of imported inflation. Furthermore, the strength of the US dollar relative to the Rwandan franc adds pressure to the country’s trade balance and debt servicing obligations (IMF, 2025).

Despite these headwinds, the Central Bank is committed to fostering a stable and inclusive economic environment. By maintaining the CBR, the Bank sends a signal of policy consistency and credibility, which is vital in maintaining investor confidence and safeguarding financial stability. This monetary stance is expected to keep borrowing costs stable in the short term, benefiting both households and businesses. Commercial banks are likely to keep lending rates unchanged, allowing for continued access to credit, particularly for productive sectors such as agriculture, manufacturing, and services.

For the general population, this policy continuity provides a measure of predictability in the cost of living. While some upward pressures on prices remain, particularly for imported goods, the BNR’s inflation-targeting regime ensures that corrective measures will be taken should inflation breach the upper threshold. For investors and development partners, the decision affirms Rwanda’s commitment to sound macroeconomic management, a hallmark that has underpinned the country’s strong growth over the past decade.

Looking forward, the BNR will continue to monitor macroeconomic indicators and adjust the policy stance as needed. The Bank remains particularly vigilant regarding inflationary pressures, foreign exchange dynamics, and developments in credit to the private sector. The next MPC meeting is expected in August 2025, at which point the monetary authorities will reassess the evolving risks and adjust accordingly.

In her closing remarks, Governor Soraya Hakuziyaremye reiterated that the Central Bank's overarching objective is to foster price stability, support inclusive economic growth, and maintain a resilient financial system. She noted that while current inflation levels remain manageable, the Bank is prepared to act swiftly in the event of domestic or external shocks that may threaten macroeconomic stability (BNR, 2025b).

For those seeking a deeper understanding of the policy rationale and broader economic implications, the full press briefing is available on the National Bank of Rwanda’s YouTube channel. This review marks another chapter in Rwanda’s disciplined approach to monetary policy an approach that continues to inspire confidence among citizens, investors, and the international community alike.

By Donald Masimbi (MSc Econ)
Assistant Lecturer | Economic Analyst | PhD Candidate in Energy Economics
Founder – MDS Consultancy
www.mdsconsultancy.org