Central Bank Governor John Rwangombwa
Monetary Policy Committee (MPC) of the National Bank of Rwanda has made the decision to retain the Key Repo Rate (KRR) at 7.0 percent.
The decision was made during the committee ordinary meetings to assess the monetary policy implementation for the third quarter 2013 and to review the financial sector performance as of end June 2013.
The repo also known as repurchase agreement or sale and repurchase agreement, is the sale of securities together with an agreement for the seller to buy back the securities at a later date.
The repurchase price should be greater than the original sale price, the difference effectively representing interest, sometimes called the repo rate. The party that originally buys the securities effectively acts as a lender.
According to MPC, there is need to maintain the current monetary policy stance including the key repo rate to foster macroeconomic stability and continue stimulating the financing of the economy in the coming fourth quarter of 2013.
According to the Central Bank, the Rwandan economy has been evolving in a challenging global and domestic environment, marked by persistent uncertainties on international financial markets, low global economic recovery and low growth in domestic credit to the private sector.
Experts say that within this environment, the national economic performance has been moderate with annualized real GDP growth of 6.0 percent and 5.7 percent respectively in the First and Second Quarters of 2013.
They however say that there has been positive economic performance since the last central bank policy rate review as evidenced by improvement in economic financing and moderate inflation, and the outlook is expected to remain stable.
“On foreign exchange market, the Rwandan Franc has had a slight depreciation of 3.9 percent as of September 27, 2o13 since December 2012 but that situation is expected to stabilise until the end of 2013, on account of increase in foreign exchange inflows as well as regained confidence in foreign exchange market,” says a Central Bank communiqué.