Many people associate words, such as devaluation and inflation, with bad times. Even if someone does not understand the meaning of these words to their full extent, most people understand the consequences in daily life, especially in countries where there is a galloping inflation or a strong devaluation.
Sometimes, it may be difficult to understand why these concepts may be seen as solutions within the frame of the monetary policy of a country.
Just a week ago, the central bank of Rwanda decided to leave the reference interest rate unchanged. There were some voices at the parliament that were not happy with that decision. However, the representatives of the banking association explained that the interest rates are lower than in any other country in the same region and the economic environment remains stable.
In fact, Rwanda has had constant interest, exchange and low inflation rates since some time ago. No doubt, there is still work to be done, but I can see commercial and construction activity in the streets and I have met people determined to achieve their personal goals. That is perhaps the beginning of everything.
zandra and opportunity 
Hi Zandra,
Do you think a change in interest rate has the same level or kind of effect we observe in more mature economies as we see in Europe? I often think in an agrarian economy such as Rwanda where penetration of financial services is low and there is very limited debt and credit services, changes to interest rate seem to have very limited effect on prices.
Regards,
Yonas
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Hi Yonas,
Thank you for your comments and for your question. Indeed. A raise in interest rates may certainly have a different impact in an economy like the one in Rwanda, if we think in macro-terms. However, I do think that households that are financing their little enterprises would feel the effect, especially considering that some of them are having access to complementary debt, such as the one in favor of shelter or education (thus, not working capital). That would consequently have an impact in the books of the lenders too.
Other borrowers, that usually fear interest raises, are the trust groups, and there are many of these here. In this segment, the loan cycles are usually short. They may react quicker to interest changes, even if -depending on the raise- the real effect might be rather psychological nature. Best, Zandra
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