The Bank of Uganda (BoU) has cut the central bank rate by one percentage point to 13 per cent, the fourth successive reduction since April.

The reduction in CBR comes at the back of a rebound in economic performance of 4.8 per cent in the financial year 2015/16 up from a projected 4.6 per cent.

Central Bank governor Emmanuel Tumusiime Mutebile announcing the latest monetary policy stance on Tuesday said, “High frequency indicators point to a significant pick-up in economic activity in the fourth quarter of 2015/16 which has continued in the first quarter of financial year 2016/2017.”

Since the last CBR review in August when the central bank cut the benchmark lending rate by one percentage point to 14 per cent, there has been debate as to whether Uganda should adopt a similar stance as Kenya in capping interest rates for commercial banks.

Last month Prof Mutebile held consultations with banking stakeholders to discuss the matter, where he voiced concerns that capping the interest rates for both loans and deposits could distort the market, denying borrowers access to credit.

READ: Bank of Uganda under pressure to limit cost of credit

“A gradual recovery in private sector credit will support private sector spending and economic growth,” Prof Mutebile said on Tuesday.