Rwanda cenbank holds repo rate, hikes 2015 growth view

KIGALI (Reuters) - Rwanda's central bank kept its key lending rate unchanged on Wednesday saying that, despite rising inflation, monetary policy could remain accommodative as the improving economy had yet to reach its full growth potential. The economy would grow 7 percent this year rather than the 6.5 percent the bank predicted earlier, its governor John Rwangombwa told a news conference after it held its repo rate at 6.50 percent. Rwangombwa also said he saw inflation in the 4.5 percent to 5.5 percent range by year-end, up from a projection of 3.5 to 5 percent, with the weakening of the country's franc against the dollar one factor in the rise. "(Economic) output is evolving below potential, which implies that (the central bank) can continue to stimulate economic activity without creating inflationary pressures," he said in a statement. Rwanda's urban inflation rate, a key indicator for the central bank, rose 4.8 percent year-on-year in November, up from 2.9 percent a month earlier. (Reporting by Clement Uwiringiyimana; Writing by George Obulutsa; editing by John Stonestreet)

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