Bank of Uganda holds policy rate at 9.5pc, cites inflation risks

Tuesday February 06 2024
bank of Uganda

Bank of Uganda Headquarters in Kampala, Uganda. PHOTO | MORGAN MBABAZI | NMG


The Bank of Uganda (BoU) on Tuesday maintained its key lending rate saying risks to the inflation outlook continued to be tilted to the upside.

It was the third monetary policy committee (MPC) meeting in a row where BoU kept its Central Bank Rate (CBR) at 9.5 percent.

"The MPC decided that keeping the CBR unchanged was necessary to anchor the inflation around the medium-term target," BoU Deputy Governor Michael Atingi-Ego told a news conference.

Read: Uganda holds key rate, sees inflation hitting target by year-end

The bank targets core inflation of 5 percent in the medium term.

"The inflation forecasts have been revised up slightly in the short term ... in light of the relatively stronger exchange rate depreciation," Atingi-Ego added. "Inflation is projected to stay around 3 percent through the first half of 2024, broadly reflecting stable demand conditions."


The bank last cut its policy rate by 50 basis points in August after year-on-year inflation fell below 5 percent in June.

Read: Uganda policy rate cut gives shocks and optimism

Inflation has remained below 5 percent, rising slightly to 2.8 percent in January from 2.6 percent in December, on transport and food prices.

The central bank said on Tuesday that it expected economic growth of around 6 percent in the current fiscal year that ends in June, similar to the projection it made in December.

Uganda's economy has performed better than many of its African peers in an environment of tightening global financial conditions, helped by favourable weather and improved agricultural production.