KIGALI: Rwanda's central bank held its key lending rate at 7 percent on Friday, holding a relatively tight policy stance as it eyes a gradual fall in inflation in the east African country.
The National Bank of Rwanda (BNR), which raised interest rates by a total of 100 basis points late last year, cited a "moderate" inflation rate and said measures were in place to contain external economic shocks.
Rwanda has had a relatively easier ride to other countries in east Africa, including Kenya, Uganda and Tanzania, which have had to raise interest rates to as high as 20 percent to combat double digit inflation and weak currencies.
The central bank said it expected the headline inflation rate to be contained at around 7.4 percent by the end of June, slightly lower than the 7.85 percent recorded in February.
"The financial sector is sound and resilient to external shocks, the inflation remains moderate and the Rwandan Franc is stable," it said in a statement.
The bank said it expected headline inflation in the second quarter of 2012 to remain "stable as a result of pursuing tight monetary policy ... and other government policy measures aiming at mitigating exogenous supply shocks that include high oil prices and sovereign debt in the Euro zone".
The central bank projects economic growth of 7.6 percent this year, down from an estimated 8.8 percent in 2011.
The bank said it was committed to a market-driven exchange rate and would come into the foreign exchange market as and when needed to contain any volatility.
"The BNR will continue intervening on the domestic foreign exchange market only to smoothen the exchange rate volatility," it said.
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