The Bank of Uganda (BoU) yesterday left the Central Bank Rate (CBR) at 10 percent for the second time, saying it is still effective enough to control the rise in inflation, bring stability to the lending rate, and exchange rate, and drive economic growth.

While the economy is faced with headwinds arising from the global and domestic scenes, the BoU said that based on the uncertainty surrounding the economic outlook, the Monetary Policy Committee (MPC) assessed that the current CBR would contain domestic demand pressures, while accommodating and supporting economic recovery.

Presenting the Monetary Policy Statement for the month of February 2023, the Deputy Governor BoU, Mr Michael Atingi-Ego, said the Bank of Uganda will continuously review the monetary policy stance against new information and stands ready to respond appropriately to ensure that inflation is brought back sustainably to the 5 percent medium-term target.

Uganda’s annual headline inflation increased to 10.4 percent in January 2023 from 10.2 percent and annual core inflation increased from 8.4 percent to 9 percent. However, the BoU said the increase in inflation is expected to be short-lived.    

“Inflation is expected to continue declining in the months ahead due to lower energy prices, improved global supply chains, exchange rate stability supported by tight monetary conditions, and moderate demand pressures due to tight monetary and fiscal policies, core inflation is expected to average 6.5 percent and 5.6 percent respectively in 2023, but will return to the five percent target by the end of 2023,” he said.