Rwanda joins Botswana in defying hold trend, raises MPR to near 20-year high

The National Bank of Rwanda (BNR) raised its benchmark interest rate by 100 basis points to 8.25 percent on Thursday, its highest level since 2009, as policymakers moved aggressively to contain surging inflation and shield the economy from mounting external shocks.

The latest increase follows a 50-basis-point hike in February and underscores growing concern among policymakers over persistent price pressures worsened by the prolonged Middle East conflict and rising global oil prices.

Soraya Hakuziyaremye, governor of the central bank, said at the Monetary Policy Committee meeting that the decision was aimed at slowing the pace of price increases while preserving macroeconomic stability and long-term growth.

“This increase aims to bring down the pace of rising prices in the market and keep inflation within BNR’s target range as one of the key pillars in safeguarding economic growth,” she added.

The move places the East African nation among a small group of African economies tightening monetary policy at a time when most central banks across the continent are opting to keep rates unchanged amid heightened global uncertainty.

Rwanda joins Botswana, which last month unexpectedly raised its benchmark interest rate by 200 basis points to 5.5 percent from 3.5 percent, breaking away from the broader hold trend seen across African markets.

Central banks in South Africa, Morocco, Mozambique, Namibia, Kenya, Egypt, Ethiopia, Uganda, Tanzania, Nigeria and Ghana have largely maintained rates in the past three months, signalling a shift from aggressive easing expectations to a more cautious stance as geopolitical tensions fuel energy and commodity price volatility.

For more than two months, escalating tensions involving the United States, Israel and Iran have rattled commodity markets and intensified fears of supply disruptions around the Strait of Hormuz, a key route for global oil shipments. The shock has filtered into African economies through higher fuel, transport, food and production costs.

The latest tightening marks a notable reversal for policymakers who had recently begun benefiting from moderating inflation after nearly two years of aggressive monetary tightening.

Inflation in Rwanda accelerated sharply to 11.5 percent in April 2026 from 7.7 percent in March, crossing into double digits for the first time in almost three years and reaching its highest level since October 2023.

The central bank said inflation is expected to remain elevated in the near term before gradually easing back toward its target range of 2 percent to 8 percent by year-end.

By increasing the benchmark rate, BNR is effectively making borrowing more expensive for commercial banks, a move that will likely feed into higher lending costs for businesses and households.

The tighter policy stance is designed to curb excess liquidity and dampen consumer demand, helping to reduce second-round inflationary effects across the economy.