The impact of monetary policy on consumer price index (CPI): 1985-2010

5.3 Recommendations

ü The central bank should decrease the interest rate in order to motivate investors and increase the level of production in Rwanda. Those investors should however be motivated and oriented to invest strategic sectors in order to find solutions to a weak supply capacity of Rwanda in international trade by promoting export of Rwanda. This can reduce also the Rwandan imports and this can be a solution to inflation in Rwanda.

ü Monetary authorities should do their best in order to avoid the depreciation of

Rwandan currency because the depreciation of Rwandan currency brings nothing

except to bring inflation in Rwanda.

References

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Hsing, Y. (2004). Estimating the monetary policy reaction function for Canada. A VAR model.

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BNR, Annual report, 2003.

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BNR, Economic review no 3.

BNR, Economic review no 5.

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