Rwanda's central bank kept its benchmark repo rate steady at 5.50 percent, saying positive macroeconomic conditions, including low inflationary and exchange rate pressures, seen in the second quarter of this year "are likely to prevail in the remaining part of 2018."

The National Bank of Rwanda (BNR) raised its forecast for growth this year to 7.2 percent, in line with the International Monetary Fund's projection, from its March forecast of 6.5 percent.

BNR has maintained its rate since December 2017 when it was cut for the third time since it embarked on an easing cycle in December 2016. Since then, the rate has been cut 100 basis points.

While inflation remains low and stable, Rwanda's economy has been growing strongly with Gross Domestic Product expanding by an annual 10.6 percent in the first quarter of this year and slightly up from 10.5 percent in the fourth quarter of last year.

Economic activity was fueled by a 12 percent expansion in the service sector, an 8 percent rise in the agricultural sector and a 7 percent rise in industry.

"Leading indicators of economic activities show that the economy has continued to perform well in 2018 Q2, tending towards attaining the 7.2 percent GDP growth projection in 2018," BNR said.

In March BNR Governor John Rwangombwa's predicted 2018 growth of 6.5 percent based on good climate conditions. Growth in 2017 is estimated at 6.1 percent, down from 6.0 percent in 2016.

Earlier this month the IMF forecast 2019 growth of 7.8 percent and 2020 growth of 8.0 percent. Inflation is seen averaging 2.8 percent this year, 5.0 percent in 2019 and 5.0 percent in 2020.

In March the central bank forecast inflation this year of 5.0 percent, up from 4.9 percent in 2017.

Rwanda's inflation rate turned positive in May after three months of deflation, reaching the highest level since October 2017. Inflation rose to 1.8 percent in May from minus 0.1 percent in April after a rise in food, energy and transport costs.

Rwanda's franc has been depreciating steadily in the last decade and was down by 1.5 percent against the U.S. dollar by the end of May as compared with December, slightly up from a 1.0 percent depreciation in the same 2017 period but down from a 4.0 percent fall in same 2016 period, BNR said.

Today the Rwandan franc (FRW) was trading at 860 to the U.S. dollar today, down 1.9 percent this year.

- Central Bank News /African Markets