Rwanda has raised its benchmark interest rate to a near three-year high, defying a broader wave of monetary easing across the continent as policymakers move to contain rising inflationary pressures.
The National Bank of Rwanda’s Monetary Policy Committee (MPC) increased the key policy rate to 7.25 percent from 6.75 percent at its first meeting of 2026. The 50-basis-point hike marks the largest rate increase in almost three years and pushes borrowing costs to their highest level since August 2023.
With the latest move, cumulative tightening now stands at 75 basis points since the central bank resumed rate hikes last year. Authorities said the decision is aimed at keeping inflation within the official 2–8 percent target band.
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The decision sets Rwanda apart from several African economies that have shifted toward rate cuts as inflation moderates and currencies stabilise. Countries including Kenya, Egypt, Angola, Ghana, Mozambique and Zambia have eased policy, while Uganda, South Africa and Tanzania have opted to hold rates steady.
Governor Soraya Hakuziyaremye described the hike as a “measured step” to restore price stability.
“The decision is a measured step we are taking to bring inflation back within the target band, which is a necessary condition to sustain economic growth,” she said at a post-meeting briefing.
She added that the Monetary Policy Committee would continue to monitor inflation and broader macroeconomic conditions and stands ready to adjust policy if price pressures intensify beyond current projections.
Inflationary risks, according to the governor, include weaker agricultural output, persistent energy-related cost pressures and potential global or regional geopolitical shocks.
Headline inflation rose for a second consecutive month to a seven-month high of 7.5 percent in January, up from 5.2 percent in December. Urban inflation accelerated further to 8.9 percent from 8 percent over the same period.
Based on central bank forecasts, inflation is expected to remain slightly above 8 percent in the first half of 2026 before easing back toward the target range by year-end.
Despite mounting price pressures, economic growth remains resilient. The government projects annual expansion will stay above 7 percent through 2028.
However, the outlook has softened since November, reflecting weaker-than-expected food supply in late 2025, sharper fuel price increases and stronger underlying pressures from core sectors such as housing, restaurants and hotels, the governor noted.
