Uganda retains key lending rate on rising inflation

 

Bank of Uganda in Kampala. The banking regulator has maintained its Central Bank Rate at 12 per cent for the fifth consecutive month.

The Bank of Uganda (BoU) has maintained its Central Bank Rate (CBR) at 12 per cent for the fifth consecutive month as the rate of inflation edged up after dropping for two months in a row.

Prof Emmanuel Tumusiime-Mutebile, BoU’s governor on Wednesday said that the regulator will maintain the CBR at 12 per cent this month with the inflation rate expected to remain at between 1 and 2 percentage points above the target rate of 5 per cent over the next few months.

Last week the Uganda Bureau of Statistics said that the rate of inflation edged up to 4 per cent from 3.5 per cent in February as monthly food prices rose and that core inflation which excludes food crops, energy, fuel and utilities rose to 6.8 per cent in March from 5.6 per cent.

Prof Tumusiime-Mutebile however said that later on this year the inflation rate is expected to fall back towards 5 per cent.

“Given that the medium term forecast for inflation is still in line with BoU’s target of 5 per cent, and that recovery of real output is gaining momentum, BoU will maintain a neutral monetary policy stance and hold the CBR at 12 per cent,” he said.