Dr. Michael Atingi-Ego, the BoU Deputy Governor
The Bank of Uganda has increased the Central Bank Rate (CBR), a benchmark lending rate for commercial banks, by 50 basis points to 9 percent.
This comes as the economy continues to face strong cost-push inflation pressures from the external environment, dry weather conditions, and exchange rate depreciation amidst weak domestic demand.
The annual headline and core inflation rose to 7.9 percent and 6.3 percent in July 2022 from 6.8 percent and 5.5 percent in June 2022, respectively.
While issuing the Monetary Policy Statement for August 2022 on Friday at the Central Bank headquarters in Kampala, Dr. Michael Atingi-Ego, the BoU Deputy Governor, said that their forecast show that inflation for 2022 remains in the range of 7.0 to 7.4 percent.
Quoting quarterly GDP estimates from Uganda Bureau of Statistics (UBOS), Atingi-Ego said the economy contracted by 1.6 percent quarter on quarter in March 2022.
“All sectors of the economy contracted with the services sector taking the biggest hit,” Atingi-Ego said.
He added: “Overall, economic growth prospects have been dimmed further with increasing risks of global recession, and weaker consumer and business sentiments as inflation and commodity prices, continue to erode households and business incomes and financial conditions tighten.”
He revealed that economic growth is now projected in the range of 2.5-3.0 percent in 2022, partly reflecting the effects of higher costs of production arising from fuel and transportation on activity, but will rise to 5.0-6.0 percent in 2023, in part supported by public investments and recovery in demand as inflationary pressures begin to wane.
