Uganda Delivers Second Rate Cut Amid Improved Inflation Outlook

BREAKING NEWSOctober 7, 2024 at 1:15 PM UTC

TLDR

Uganda's central bank lowered its benchmark interest rate to 9.75% from 10%, citing easing inflation pressures.
Deputy Governor Michael Atingi-Ego highlighted balanced inflation risks and emphasized a cautious monetary policy stance aimed at supporting Uganda's socio-economic transformation.
The stable Ugandan shilling, driven by strong coffee export earnings and moderate import growth, has helped maintain subdued inflation rates.

Uganda’s central bank lowered its benchmark interest rate to 9.75% from 10%, marking its first consecutive rate cut in four years as inflation pressures ease.

The move follows a similar reduction in August, signaling confidence in the improved inflation outlook. Deputy Governor Michael Atingi-Ego stated that risks to inflation are balanced but emphasized a cautious monetary policy stance.

The bank aims to maintain inflation control while supporting Uganda’s socio-economic transformation. Annual inflation slowed to 3% in September, while core inflation dropped to 3.7%, both below the central bank's 5% target.

Key Takeaways

Uganda's central bank is maintaining a cautious approach to monetary easing, with back-to-back rate cuts signaling confidence in inflation control. A stable Ugandan shilling, buoyed by strong coffee export earnings and moderate import growth, has also contributed to subdued inflation. The shilling has appreciated nearly 4% against the dollar since June, further aided by the US Federal Reserve’s recent rate easing.

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