The Bank of Uganda (BoU) has revealed that interest rates have edged up despite easing of monetary policy in October 2024 due to the fiscal policy stance. BoU last Thursday maintained the Central Bank Rate (CBR) at 9.75% in order to control inflation while fostering Uganda’s economic growth and socio-economic transformation. The CBR is a benchmark lending rate for commercial banks.
According to BoU, Private Sector Growth (PSC) growth slowed in the three months to December 2024 compared to the three months to September 2024.
“PSC grew by 7.8% down from 8.9% driven by shilling (10.0% from 10.3%). However, foreign currency denominated loans declined to 2.0% from 4.9%. Commercial bank lending rates fell to 18.3% in the three-months to December 2024 relative to 18.6% in the period to September 2024,” BoU says.
BoU says economic growth is still projected at 6.0-6.5% in FY 2024/25 and 7.0% in the outer years. “Domestic inflation has evolved as projected supported by monetary policy actions, exchange rate stability, favourable food and energy prices amid relatively low global inflation. The inflation projections have been revised upwards relative to the previous forecast round. The higher inflation projection is due to increased global uncertainties arising from the trade wars,” BoU says, adding: “Risks to the inflation outlook are tilted to the upside, arising from both the domestic and global environments. Likely combination of emerging global challenges together with government expenditure pressures pose a risk to both growth and inflation.”
