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Rwanda's central bank lowers key repo rate to 6.25 percent

Xinhua, December 29, 2016 Adjust font size:

The National Bank of Rwanda Wednesday announced it had revised the key repo rate from 6.5 percent to 6.25 per cent.

The key repo is the rate at which the central bank lends money to commercial banks.

The rate had remained unchanged at 6.5 percent since 2014.

Central bank Governor John Rwangombwa said the decision followed the quarterly Financial Stability Committee and Monetary Policy review.

"The committee had found the financial sector to be sound and profitable and able to stand external shocks. They revised the policy rate to further support the financing of the economy by the banking sector," he said.

The monetary policy committee decided to revise down the policy rate to 6.25 percent for the first quarter of 2017 from 6.5 percent to further support the financing of the economy, according to Rwangombwa.

"There is no direct impact expected immediately in terms of the reduction of lending rates. There are many factors that influence the lending rate. There is no model that can try to generate what impact this is likely to have on the lending rate," Rwangombwa told journalists.

Meanwhile, Rwanda's trade deficit decreased by 5.1 percent in the first 11 months of 2016 year on year owing to a decrease in formal imports by 2.4 percent in value against an increase in value of formal exports by 6.1 percent, the central bank said in a Wednesday statement.

Headline inflation also surged from 4.5 percent in the first quarter of 2016 to 4.9 percent in the second before surging to 6.4 percent in the third quarter, as a result of hike in food inflation. Endit