The National Bank of Rwanda (BNR) has increased the Central Bank Rate (CBR) by 50 basis points to 7.25 percent, signaling a tightening of monetary policy aimed at containing inflationary pressures while safeguarding macroeconomic stability. 

The decision was announced following the Monetary Policy Committee (MPC) meeting held on February 18, 2026, during which members assessed recent domestic and global economic developments alongside updated inflation projections. 

Inflation Pressures Drive Policy Adjustment 

BNR indicated that inflation has continued to rise, reaching 7.4 percent in the fourth quarter of 2025, before increasing further to 8.9 percent in January 2026, exceeding the medium-term target range of 2–8 percent. 

The rise in prices has been largely attributed to: 

  • Higher food and fresh produce prices, 
  • Increased energy and fuel costs, 
  • Higher electricity tariffs, 
  • Rising housing and service costs, 
  • Weather-related pressures affecting agricultural output. 

According to the central bank, these developments risk triggering second-round price effects if left unaddressed. The increase in the CBR is therefore intended to moderate inflation and guide it back toward the target band over the medium term. 

Strong Domestic Economic Performance 

Despite inflationary pressures, Rwanda’s economy continues to demonstrate resilience. Economic activity expanded by an average of 8.7 percent during the first three quarters of 2025, supported by strong domestic demand and sustained growth across key sectors. 

Export performance also remained robust, driven primarily by traditional exports such as coffee and minerals, alongside growth in non-traditional exports including processed agricultural products. However, higher imports contributed to a widening trade deficit, reflecting strong investment activity and demand for essential goods and construction materials. 

Financial Sector Remains Stable and Resilient 

BNR’s Financial Stability Committee noted that Rwanda’s financial sector remains sound, supported by strong capital and liquidity buffers across financial institutions. 

Banks and microfinance institutions continue to maintain capital adequacy ratios well above regulatory requirements, while liquidity indicators remain comfortable. Credit growth has continued to support economic activity, with lending expanding across sectors such as manufacturing, construction, and trade. 

Payment systems also operated smoothly, with increased digital payment usage and declining fraud incidents, although vigilance remains necessary as digital transactions grow. 

Exchange Rate and Market Developments 

The Rwandan franc showed improved stability, depreciating at a slower pace compared to the previous year. This trend reflects stronger tourism receipts, increased remittance inflows, and ongoing foreign exchange market reforms that have helped ease external pressures. 

Meanwhile, interbank rates have moved closer to the policy rate, supporting monetary policy transmission, while lending rates declined slightly amid improved liquidity conditions in the banking sector. 

Outlook: Stability Expected Despite Global Uncertainty 

BNR projects that inflation will remain elevated in the near term, slightly above 8 percent during the first half of 2026, before gradually easing toward the target range by the end of the year, assuming stable international commodity prices and improved food supply conditions. 

For the financial sector, the outlook remains positive, underpinned by strong capitalization, prudent risk management, and continued credit support to the economy. 

Implications for the Banking Sector 

For members of the Rwanda Bankers Association (RBA), the policy rate adjustment signals a continued focus on price stability as a foundation for sustainable financial sector growth. 

Changes in the CBR typically influence interbank market conditions, funding costs, and ultimately lending and deposit rates. Financial institutions are therefore expected to continue aligning pricing strategies, risk management practices, and credit allocation decisions with evolving monetary conditions.