Kigali — The Central Bank of Rwanda will revise the Key Repo Rate (KRR) down from 7% to 6.5% for commercial banks which in turn is expected lower interest rates for business people.
Bank Governor John Rwangombwa was last week holding a news conference to assess the monetary policy implementation and financial sector performance for quarter 2, 2014.
"This is aimed at maintaining the economic growth the country is experiencing," the governor said.
"This will support continued lending in the banking sector to private sector and we also expect to influence the interest rate from banks to continue moving on the trend the central bank has started taking," he said.
Repo rate declined from 6.68% in June 2013 to 3.59% in May 2014 while lending rate declined from 17.65% in June to 17.23% in May 2014 and deposit rate fell from 10.61% to 10.1% during the same period.
"The treasury bills rates declined from 10.8% in June 2013 to 5.92% in May 2014 which is a good sign of falling lending rates by the central bank," the governor said.
The Governor said Rwanda's economy has continued to recover from the slowdown it went through in 2013 growing at 7.4% in the first quarter 2014 and this is because of the high increase in the credit to private sector as a result of the bank's accommodative monetary policy implemented since June 2013 plus the fiscal liquidity injection
"The outstanding credit to private sector increased by 8% between December 2013 and May 2014 as compared to 4% in the same period of 2013," Rwangombwa said.
Rwanda is trying hard to deal with both the internal and external forces that may affect the economic growth rate the country is experiencing and here different strategies have been developed to maintain that.
"We are building capacity for inspectors for both banks and non-banks where we need to have people with capacity to monitor the financial sector at large," Jonathan Birasa Auditor at BNR said.