Author: Prof HAKIZIMANA Maurice
In 2024, the then-Governor of the Banque nationale du Rwanda, John Rwangombwa, publicly acknowledged that the Rwandan franc had sharply depreciated, losing an exceptional 16% of its value in a single year.
Today, in 2025, the National Bank of Rwanda announced that it had raised its key interest rate from 6.75% to 7.25%.
What does this decision mean for the country’s economy, the value of the Rwandan currency, the operations of banks, and, most importantly, the daily life of ordinary citizens? What can we expect next?
Here is my analysis, based on my modest knowledge of economics.
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Read another article I wrote in 2024, which was highly appreciated, discussing the depreciation of the Rwandan franc and possible measures to stop or slow it. The article was titled:
“The Rwandan Franc Has Lost Significant Value This Year: What Are the Causes of This Depreciation?”
(“Ifaranga ry’u Rwanda ryataye agaciro cyane muri uyu mwaka: Guta agaciro k’ifaranga biterwa n’iki?“)
(1) What Does the BNR’s Decision to Raise the Key Rate from 6.75% to 7.25% Mean?
It means that the National Bank of Rwanda (BNR) is giving commercial banks the authority to increase interest rates on loans.
Borrowing money will therefore become more expensive. Banks will raise rates not only on loans but also on savings deposits.
This will strain many citizens’ finances, although some people may benefit.
(2) How Does This Affect the Ordinary Citizen?
Negatively.
Loans will become more expensive. Those taking credit to buy a house, a car, or invest in their business will face higher costs, adding to existing financial burdens.
People with variable-rate loans may see their monthly payments increase.
If homeowners took loans to build houses and banks raise their rates, they will likely pass these costs onto tenants. This will impact urban renters the most — in residential housing, commercial spaces, or other rented facilities.
Moreover, in the near future, almost everything could become more expensive:
- Community health insurance (mutuelle de santé)
- Other types of insurance
- Medicines
- Fuel
- Transportation (goods and passenger transport)
- Food
- Alcoholic beverages and juices
- Electricity
These price increases are likely consequences of the BNR’s decision.
Who might benefit?
In the short term, those who may gain are individuals with blocked or long-term bank deposits (accounts left untouched for months or years) or those who rarely withdraw money. Their interest earnings could increase.
However, these people are very few in Rwanda — mainly wealthy individuals owning industries or real estate.
(3) Is It Normal for the BNR to Raise and Then Lower the Key Rate as the Situation Improves?
Yes, this is entirely normal and part of the BNR’s mandate.
When it observes economic imbalances — such as high inflation, currency depreciation, or financial stress — it intervenes to prevent further deterioration. When the indicators improve, it may lower the key rate to ease citizens’ burdens and stimulate economic activity.
In short, this is how central banks operate worldwide.
However, in Rwanda, it is rare for the economy to recover enough for the BNR to sustainably reduce the key rate. Since 2024, the BNR has struggled to fully stabilize the situation.
Recent key rate history (2024–2026):
February 19, 2026: The BNR unusually raised the key rate to 7.25%, signaling a serious and sudden economic problem.
2024: The BNR set the key rate at 6.5% in the second quarter to address rising prices and maintain economic stability.
February 2025: The BNR kept the rate at 6.5%, neither raising nor lowering it, considering it sufficient to curb inflation and remain within its 2–8% target.
August 21, 2025: The BNR slightly raised the rate to 6.75% for three months to protect the Rwandan franc. This modest increase did not heavily affect the population.
November 20, 2025: The BNR maintained the rate at 6.75%, noting it was appropriate for ongoing inflation control and economic stability.
(4) Why Did the BNR Take This Decision?
The BNR is the state’s central bank, not a commercial bank, but it regulates all other banks in the country.
It acted to reduce the amount of money circulating in the market and avoided printing more currency, which would have further devalued the Rwandan franc.
It also aimed to curb inflation, which was outpacing citizens’ purchasing power. The government lacks the funds to raise wages or provide direct financial support.
Finally, the BNR acted to protect the currency from severe depreciation. While depreciation has continued, it has not yet reached catastrophic levels.
Could the BNR reduce the key rate soon, for example from 7.25% to 5.1%?
Given the current situation, this seems unlikely. The central bank maintains that inflation remains under control as long as it stays below 8%, though even a small spike could exceed this limit.
The BNR’s target for the key rate is 2% (very favorable) to 8% (very unfavorable). This year, the situation is clearly trending toward the unfavorable end.
Soraya Hakuziyaremye is the current Governor of the National Bank of Rwanda.
This situation also indicates that the government has chosen not to carry this burden itself — either because it cannot or does not wish to.
If you are reading this analysis, be aware that almost everything is likely to become more expensive in the near future:
- Health insurance (mutuelle de santé)
- Other types of insurance
- Medicines
- Fuel
- Transport (goods and people)
- Food
- Alcohol and juices
- Electricity, and more
All these costs may rise as a result of the BNR’s decision.
The only good news: the air we breathe will remain free!
Lesson clear? OK! Class dismissed
This World
Prof HAKIZIMANA Maurice II Follow my WhatsApp channel https://whatsapp.com/channel/0029VaCyM5ILdQejDYwQ2b2u II Follow my facebook page: https://www.facebook.com/professormaurice/.
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