Bank of Uganda has maintained the Central Bank Rate (CBR), a benchmark lending rate for commercial banks at 10 percent in February 2019.
This is according to a Monetary Policy Statement issued to the press today by Governor Bank of Uganda, Prof. Emmanuel Tumusiime – Mutebile.
Mutebile said although inflation outlook over a 12-month horizon has improved compared to the December 2018 forecast round, risks to the inflation remain elevated.
He added that the economy is projected to grow by about 6.3% in FY2018/19 and remain on a steady growth trajectory over the coming years, with output trending above potential.
“…The strong growth is in part supported by our accommodative monetary stance and the resultant favourable financial conditions, fiscal impetus and multiplier effects of public infrastructure investments, ensuing strong domestic demand conditions and improved agricultural performance,” Mutebile said.
He however said risks to the projected economic growth remain.
These include weather related constraints to agricultural production and challenges relating to the financing of public investment programmes.
In addition, the escalating global trade frictions and lower than the anticipated global growth may not only subdue external demand thereby weakening Uganda’s external position, but could also lead to volatility in the domestic foreign exchange market.
“Furthermore, although private sector credit growth has been on a recovery path since January 2018, it remains below its historical trend and its contribution to economic growth could be weighed down by the relatively weak performance of foreign currency-denominated loans,” Mutebile said.