The Bank of Uganda has maintained the Central Bank Rate (CBR) at 9.75%, following its Monetary Policy Committee (MPC) meeting held on May 14, 2026, citing an overall stable macroeconomic outlook despite rising global uncertainties.
In a statement issued after the meeting, the central bank said the current monetary policy stance remains appropriate, even as geopolitical tensions—particularly the conflict in the Middle East—continue to pose risks to inflation and global economic stability.
“The Committee assessed that the current monetary policy stance remains appropriate and well aligned with prevailing macroeconomic conditions,” the statement read.
Inflation remains below target but outlook revised upward
The Bank of Uganda noted that inflation has remained below the medium-term target of 5%, with annual headline inflation averaging 3.4% and core inflation at 3.5% over the past 12 months to April 2026.
However, the outlook has been revised upward due to rising global oil prices and uncertainty in international markets. Core inflation is now projected to range between 5.0% and 5.3% over the next 12 months.
Headline inflation slightly increased to 3.0% in April 2026 from 2.8% in March, driven mainly by energy, fuel, and utilities (EFU), while core inflation rose marginally to 3.0%.
The central bank warned that sustained fuel price increases could trigger broader inflationary pressures across the economy, although it said it was still too early to fully assess the impact.
Economy projected to grow steadily
Despite external risks, the Bank of Uganda said the economy continues to perform strongly, supported by activity in agriculture, industry, and services.
Economic growth is projected at between 6.5% and 7.0% in the 2025/26 financial year, with average quarterly growth of about 6.7% recorded in the first half of the year.
Over the medium term, growth is expected to average around 8%, driven by increased exports and investment, particularly in the extractive sector.
However, the bank cautioned that risks remain tilted to the downside due to geopolitical tensions, global policy uncertainty, and possible adverse weather conditions.
Exchange rate and policy stance
The central bank also noted that the Uganda shilling has depreciated by about 5.4% between February and April 2026, partly due to global shocks linked to the conflict in the Middle East.
It maintained that monetary policy would remain flexible and data-driven to respond to emerging risks.
“The Monetary Policy Committee judged it appropriate to maintain the CBR at 9.75 percent as it continues to assess developments in the global economic environment,” the statement added.
The CBR band remains at ±2 percentage points, with the rediscount rate and bank rate held at 12.75% and 13.75% respectively.
Cash reserve requirement tightened
The Bank also noted that it raised the Cash Reserve Requirement (CRR) to 11% from 9.5% in March 2026 to help manage liquidity and anchor inflation expectations.
Governor Michael Atingi-Ego said future decisions will remain strictly data-dependent, with the Bank prepared to act as conditions evolve.
“Future monetary policy decisions will remain firmly data dependent and guided by the evolving outlook and balance of risks,” he said.
The central bank emphasized that while Uganda’s economy remains resilient, continued vigilance is required to navigate global headwinds and maintain price stability.
