The Bank of Uganda (BoU) has maintained the Central Bank Rate (CBR), a benchmark lending rate for commercial banks, at 9.5% so as to keep inflation within the Central Bank’s target of 5%.
While issuing the Monetary Policy Statement for December 2023 at BoU headquarters in Kampala on Wednesday, December 6, 2023, BoU Deputy Governor, Michael Atingi-Ego, said although the outlook for both inflation and economic growth is favourable, BoU’s Monetary Policy Committee (MPC) noted that inflation has bottomed out, with significant uncertainties on the horizon.
“Therefore, keeping the CBR unchanged is necessary to anchor inflation around the target in the medium term, while at the same time supporting growth in the private sector investment and socio-economic transformation,” Atingi-Ego said.
He added that economic growth is projected at 6% in FY 2023/24 and increase to between 6% and 7% in the medium term.
“The growth outlook is, however, subject to uncertainties, including slower than expected global and regional growth; a resurgence of supply chain distortions if the geopolitical tensions escalate; tighter fiscal policy in part due to unfavourable global financial markets, which could restrict government development expenditure, tight credit conditions constraining household consumption and private sector investments,” Atingi-Ego said.
Inflation continues to moderate reflecting tight monetary and fiscal policies, good crop harvests due to improved weather conditions, relative exchange rate stability as well as the declining global inflation.
Headline inflation increased slightly in November 2023 to 2.6% from 2.4% in October 2023, while core inflation remained unchanged at 2.0%.
