Rwanda's central bank on Thursday held its key interest rate at 7.5 percent, but its governor said it might cut the rate at one of its upcoming meetings if inflation dynamics continued to look positive.

National Bank of Rwanda (NBR) Governor John Rwangombwa also said last year's economic growth was expected to surpass an earlier projection of 6.2 percent.

It is the second time in a row that the NBR had kept its key lending rate steady, after raising it from 7.00 percent in August.

Annual inflation peaked at 21.7 percent in November 2022. It fell to 5.0 percent in January, within policymakers' 2-8 percent target range.

"We might start reducing the policy rate in the next MPC (Monetary Policy Committee) rounds depending on how these economic variables behave," Rwangombwa told a news conference.

"So far what we project is positive, and if it continues like this then we might start reducing the policy rate."

In its latest forecast, the bank said it expects inflation to average around 5 percent this year, but risks include geopolitical tensions that could affect global trade and weather events that could impact Rwanda's agricultural output.

In December, the Finance ministry and central bank predicted the East African economy would grow 6.6 percent this year.