Uganda Central Bank Cuts Rate to 10%

By Modupe Gbadeyanka

Bank of Uganda (BoU) has announced on Monday the reduction of its lending rate to 10 percent from 11 percent.

Governor of the country’s central bank, Mr Emmanuel Tumusiime-Mutebile, said at a news briefing that with domestic inflationary pressures staying passive and the expected sustained growth, it was only sensible for the apex bank to ease its monetary policy, especially the lending rate.

Mr Tumusiime-Mutebile further told reporters that the BoU’s medium-term target for core inflation, fuel, strips out food, metered water and electricity prices, would stay at 5 percent.

He added that a supply side shock that caused inflation to rise in the last six months was expected to diminish in the three months to September.

The apex bank chief predicted that growth would rise to 5 percent in 2017/18, supported by better implementation of public investments, higher foreign direct investments and a pick-up in private sector credit.

He noted that the economy expanded by 3.9 percent in the year to June, down from 4.7 percent the previous year, due to drought and the slow implementation of public investment projects.

Uganda’s overall inflation rate rose to 7.2 percent last month from 6.8 percent. The shilling was stable after the rate announcement, but was expected to ease gradually following the move.