Central Bank Holds Key Lending Rate At 10% As Inflation Recedes

Central Bank Holds Key Lending Rate At 10% As Inflation Recedes

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By Spy Uganda

Uganda’s central bank held its main lending rate at 10.0% in a decision announced on Wednesday, after inflation declined in November.

The Bank of Uganda’s deputy governor Michael Atingi-Ego told a news conference that the fall in annual headline inflation to 10.6% in November from 10.7% in October reflected earlier rate hikes.

Atingi-Ego said the bank’s Monetary Policy Committee forecast that inflation would continue to fall, to average between 6%-8% next year before stabilising around the medium-term target of 5% by the end of 2023.

The decision to hold the rate comes after 3.5 percentage points of rate hikes since June.

The deputy governor cautioned on Wednesday that inflation trends remained uncertain because of risks including potential increases in commodity prices.

He said the Ugandan economy remained largely resilient in the face of external shocks and was projected to grow 5%-5.3% in the 2022/23 fiscal year from 4.7% in 2021/22.

“Any adjustments to the monetary policy stance will continue to be determined by the incoming data and in a measured and gradual manner,” Atingi-Ego added.

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