The drop in market prices has led BNR to reduce its base profit

 The drop in market prices has led BNR to reduce its base profit

The Central Bank of Rwanda (BNR) announced that its base interest rate decreased by 0.5%, from 7.5% to 7% due to the speed of price reduction observed in the market.

The Governor of BNR, John Rwangomba, explained that the drop in prices in the market has led to a decrease in the basic profit.

It is one of the things returned by the Governor of BNR John Rwangomba on this Wednesday, May 29, 2024, in an interview with the media, in order to inform them of the results of the meeting of the council in charge of monetary policy and in charge of economic stability of the level 'finance.

One of the things that the monetary policy council has done is to look at the state of the economy at the global level, where they found that although it is growing, it is moving slowly because of what happened last year, but this year, it is expected to grow by 3.2% and next year.

One of the main issues that is causing the economy to slow down and return to its pre-Covid-19 state is dominated by poor security at the global level, especially in Ukraine and Russia and on the side of Palestine and Israel as explained by the CEO of the Central Bank of Rwanda, John Rwangomba.

He said, "All this affects the economy of the world as a whole, and the other thing is that due to the problems we have faced in the last two years of rising prices in the markets, the banks of the countries of the world have increased the interest they give so that they can get the money of investment is generally cheaper, this has slowed down the global economy.”

He added, "However, the climate change problem also affected the speed of economic growth, which we expected to have started to take a positive step, but what we saw was that prices at the international level continued to fall because of the decisions taken earlier, because "As the economy is slowing down, international prices have continued to fall."

It is expected that the inflation rate in the general market will decrease to 5.9% this year, from 6.8%.

The management of BNR says that this year the economy of Rwanda started from last year as it has been progressing well where it was at 8.2%, which shows that it will continue to go well.

The Central Bank of Rwanda has reduced the base interest rate

Rwangomba said, "When we look at the first quarter of this year, the figures we closely follow as BNR, show that we will continue to have a well-developed economy, because the figures we follow quickly show, when I say 8.6%, it does not mean that the whole economy will be as it is, it will improve, but it is a sign that it will remain stable in the first quarter of this year.”

Perhaps the problem is with exports, because on average, imports have continued to be higher than exports, causing a growth gap, affecting the foreign exchange market even though this year the currency is expected to depreciate so much that it is lower than ' what happened last year.

The devaluation is expected to be more than the usual rate of around 5%, although it will be less than 10%.

Regarding prices in the Rwandan market, it is expected that it will continue to decrease because throughout the year it will be at an average of 5%, while in the first quarter of this year it was at 4.7%.

The fact that the market prices are at the rate desired by the BNR which helps the economy to grow in general has made it necessary to start lowering the BNR's profits slowly, as in the past quarters they have been raised due to the problems of the price increase in the market.

In other financial matters, BNR's central administration says that financial and insurance companies continued to improve because their loans continued to grow, their profits also increased and their capital is stable based on asset ratios. the planet they have, and you are so high that they don't have to go down, which gives them confidence that they can deal with any problem that arises unexpectedly.

Regarding the funds that financial institutions need, BNR says that they have enough so that they cannot run out of what they need or even run out of loans when someone needs them, which gives confidence in the future.