Uganda Keeps Benchmark Rate at 10%

The Bank of Uganda (BoU) Tuesday said that the Monetary Policy Committee (MPC) maintained the Central Bank Rate (CBR) at 10.0% as inflationary pressures are easing and economic recovery is underway.

Amidst uncertainties, the hold position is to drive economic momentum across the country’s major economic segment as inflation condition improves. The committee noted that Uganda’s annual headline and core inflation decreased to 6.2% and 5.6% in May from 8.0% and 6.8% in April, respectively.

The MPC projects economic growth in the 6.0% to 6.5% range for the fiscal year 2023-24, noted BoU in its policy statement. The rediscount and bank rates will remain at 13.0% and 14.0% respectively, it added.

While inflation eased for the fourth consecutive month in May to 6.2% from 8% in April, a tight monetary stance is necessary to consolidate the gains achieved against consumer price inflation since the start of the year, Michael Atingi-Ego, deputy governor at the Bank of Uganda, told a news conference in Kampala.

“Potential downside risks to growth include protracted weak global growth, reduced demand for Ugandan exports, and risks to supply-chain disruptions,” he said. “The Bank of Uganda projects that the current policy stance remains appropriate to contain domestic-price pressures while supporting economic recovery.