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

Monday February 06 2023

The Bank of Uganda headquarters in Kampala. PHOTO | NMG


Uganda's central bank held its key lending rate at 10 percent on Monday, saying it expected inflation would slow to hit its target by the end of the year despite a pick-up in January that it thought would be short-lived.

The decision, announced by the Bank of Uganda deputy governor Michael Atingi-Ego at a news conference, was the second time in a row the bank has kept its policy rate unchanged.

Last year it raised rates by 350 basis points to fight inflation.

Inflation was 10.4 percent year-on-year in January from 10.2 percent a month earlier, but Mr Atingi-Ego said core inflation was expected to decline to the five percent target by the end of 2023.

Risks to the inflation outlook include the potential impact of international financial conditions on the Ugandan shilling exchange rate, and higher food and energy prices, he added.

“The current CBR (Central Bank Rate) would contain domestic demand pressures, while accommodating and supporting economic recovery,” Mr Atingi-Ego said.