Bank of Uganda maintains policy rate
For borrowers, the decision means the cost of credit is unlikely to change in the short term, offering some predictability for households with loans and businesses planning investments.
Bank of Uganda maintains policy rate
By Ali Twaha
Journalists @New Vision
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The Bank of Uganda (BOU) has kept its benchmark lending rate unchanged at 9.75%, saying current economic conditions call for caution despite low inflation and steady growth.
For borrowers, the decision means the cost of credit is unlikely to change in the short term, offering some predictability for households with loans and businesses planning investments. For savers, it helps preserve the relatively attractive returns on deposits and other interest-bearing instruments such as government bonds.
Inflation has remained well below the BOU’s 5% medium-term target, averaging 3.4% over the past year. In July, headline inflation eased slightly to 3.8% from 3.9% in June, helped by stable food prices, cheaper passenger transport, and a strong shilling.
The central bank expects inflation to remain in the 4.5–4.8% range this financial year, supported by a steady exchange rate and falling global oil prices.
Governor Michael Atingi-Ego said while price pressures are muted, potential risks remain.
“Overall, while inflation is contained, vigilance is warranted given the potential for upward pressures,” he said.
A stronger shilling, weaker global demand, or falling oil prices could push inflation down further, but exchange rate depreciation, rising import costs from trade barriers, and higher government spending could have the opposite effect.