Bank of Uganda Holds Benchmark Rate at 9.75% Amid Global Uncertainty
TLDR
- The Bank of Uganda (BoU) has kept its Central Bank Rate unchanged at 9.75% for a second consecutive meeting
- Headline inflation eased to 3.8% in July from 3.9% in June, well below the 5% medium-term target
- Uganda’s economic fundamentals remain firm, with the shilling bolstered by strong coffee export earnings
The Bank of Uganda (BoU) has kept its Central Bank Rate unchanged at 9.75% for a second consecutive meeting, citing caution in the face of global and geopolitical uncertainties. Headline inflation eased to 3.8% in July from 3.9% in June, well below the 5% medium-term target, supported by stable food prices, lower transport costs, and a strong shilling.
Governor Michael Atingi-Ego said the decision balances current low inflation with potential risks from external shocks, including geopolitical tensions, shifts in global demand, and domestic political spending ahead of elections. BoU projects inflation to remain between 4.5% and 4.8% in the current fiscal year, aided by a stable exchange rate and lower global oil prices.
Uganda’s economic fundamentals remain firm, with the shilling bolstered by strong coffee export earnings. The BoU expects GDP growth to hold steady, supported by export growth and regional trade opportunities. The central bank reiterated that it stands ready to adjust policy if inflationary or other risks escalate.
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Key Takeaways
While inflation is subdued and the currency remains strong, the BoU is prioritising stability in a volatile global environment. With public spending set to rise during the election season, the bank is monitoring for possible price pressures. The decision keeps lending rates broadly unchanged, maintaining predictable financing conditions for businesses and households. The BoU’s stance suggests it will continue to rely on a data-driven approach, intervening only if inflation moves outside its target band or external shocks threaten macroeconomic stability.
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