Central bank retains 10% interest rate

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BoU Governor Mutebile

In the Monetary Policy Committee (MPC) meeting of August 2019, Bank of Uganda (BoU) has decided to maintain the Central Bank Rate (CBR) at 10 percent.

The BoU’s high frequency indicators of real economic activity suggest that economic growth could have slackened in the first two quarters of 2019 compared to 2018 but still indicate strong economic prospects.

Governor Emmanuel Mutebile said Thursday that inflation outlook remains relatively unchanged from the previous forecast, with inflation forecast to converge to the BoU’s target of 5 percent over the medium-term (2-3 years).

The near-term (12 months ahead) inflation forecasts are however higher compared to the June 2019 inflation forecast round.

He said annual core inflation is now projected to edge-up slightly and peak at 6.4 percent in the fourth quarter of 2020 in part due to stronger domestic demand conditions.

There are nonetheless upside risks to the outlook including the future direction of food crops prices; the path of the exchange rate, which in part is contingent on external economic environment; and the ensuing demand pressures.

The evaluation of the macroeconomic developments based on the current information set and outlook, suggests that at the current CBR, monetary policy stance is accommodative and that inflation will converge to the target in the medium term while supporting growth.

“Bank of Uganda (BoU) has maintained the Central Bank Rate (CBR) at 10 percent in August 2019,” he noted.

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