And as the Governor noted as a reminder, “sustained economic growth underpins financial sector expansion.” The bank looks at global and continental conditions and assesses how far they are likely to affect the domestic economy.
On the domestic front, as the Governor reiterated, the primary mandate which “remains ensuring price stability, but also safeguarding a stable and inclusive financial system…”
The rationale for decisions taken by the MPC and FSC are in line with several factors, including, the bank’s “commitment to prudent macro economic management, which is really the foundation for investment and trade, but most importantly, for trust in our financial system.”
Looking farther afield, the global economy is performing better than expected, thanks to the easing of recent trade tensions, stability of supply chains, despite the fact that geopolitical tensions and trade policy uncertainties remain.
The International Monetary Fund (IMF) expects global gross domestic product (GDP) to slow to 3.2% this year, and 3.1% in 2026, down from 3.2% in 2024. For Sub Saharan Africa, growth is expected to stabilise at 4.1% this year, with no change from last year, going slightly up to 4.4% next year.
Global inflation had been expected to be higher, affected by trade tariffs from the United States of America (USA), and related trade shifts, but the private sector managed to adopt, front loading stocks and diversifying supply chains.
Global inflation is projected to fall to 4.2% this year up from 5.8% last year and falling further to 3.7% in 2026. In Sub Saharan Africa it is projected to fall this year to a high of 13.1%, from an even higher 20.3% last year.
The high inflation in Sub-Saharan Africa is mainly due to currency pressures and volatile food prices in some countries in Southern and the Horn of Africa, where in some instances, inflation has risen to 50% and above, affecting the rest of Sub Saharan Africa.
Commodity prices are an important determinant of external balances and inflation globally and domestically for Rwanda. Energy prices are projected to fall by 12.4% this year, falling further to 10.2% in 2026.
This is mainly due to a fall in crude oil prices, following the Organisation of Petroleum Exporting Countries (OPEC) decision to increase production and supply.
Although crude oil prices are expected to continue declining by as much as close to 16% this year, Rwandans should not expect fuel pump prices to reflect that fall, mainly due to transport costs.
Food prices are expected to fall by 6.1% this year, which should translate to lower imported inflation for Rwanda. Other commodities, metals and minerals remain high on average, increasing by 1.8%. This is to some advantage for Rwanda’s economy, as it raises export earnings.
