The decision was announced by the Governor of the National Bank of Rwanda, Soraya Hakuziyaremye, who explained that the 1% increase is intended to slow down the growing pressure of price increases on the market and keep inflation within the bank’s targeted range.

According to the central bank, the move is one of the major monetary policy measures aimed at protecting Rwanda’s economic growth while ensuring price stability for consumers and businesses. Inflation has continued to affect many economies around the world due to rising costs of food, energy, transport, and imported goods, and Rwanda has also experienced pressure in several sectors.

Governor Soraya Hakuziyaremye stated that tightening monetary policy through a higher policy rate will help reduce excessive money circulation in the economy, which is one of the methods central banks use to fight inflation. The increase means commercial banks could also raise lending rates, making borrowing more expensive for individuals and businesses.

Economic analysts say the adjustment reflects the government’s commitment to keeping inflation under control while safeguarding the country’s financial system. However, higher interest rates may also slow borrowing and investment activities in the short term.

The National Bank of Rwanda has maintained that preserving macroeconomic stability remains a priority as the country continues its economic recovery and development agenda.