Bank of Uganda maintains policy rate at 9.75% amid rising inflation concerns
Bank of Uganda says the reduction in the Central Bank Rate seeks to support economic growth, which, even as it has been above projections, has remained dampened for over a year. Photo / File
What you need to know:
- Favourable food and energy prices along with relatively low global inflation, have also helped support domestic inflation in Uganda
The Bank of Uganda has decided to maintain the Central Bank Rate at 9.75 percent for the second time saying there is expectation that the inflation rate could rise in the near term.
In Uganda, the domestic inflation has evolved as previously projected, supported by the monetary policy actions and reforms in the interbank foreign exchange market, which have contributed to the deepening of the foreign exchange market and stability of the exchange rate.
Favourable food and energy prices along with relatively low global inflation, have also helped support domestic inflation in Uganda.
However, annual headline and annual core inflation in the month of January 2025 rose to 3.6 percent and 4.2 percent from 3.3 percent and 3.9 percent in December 2024, mainly driven by an increase in services inflation, particularly in passenger transport services.
While presenting the monetary policy statement for February 2025 at the Bank of Uganda headquarters on February 6, the deputy governor Dr Michael Atingi-Ego said the Monetary Policy Committee (MPC) has noted that although inflation is expected to rise in the near term, it will return to its target in the medium term.
“Uncertainties from global developments could cause inflation to rise faster and disrupt economic activity. This situation necessitated a cautious approach to monetary policy,” he said.
The Bank of Uganda Monetary Policy Committee believes the current CBR level is adequate to control inflation while fostering Uganda’s economic growth and socio-economic transformation.
Since the central bank policy rate keeps on responding to developments in the economy; Dr Atingi-Ego said future adjustments to the CBR will depend on new data and evaluation of risks.
