By CentralBankNews.info
Uganda’s central bank held its Central Bank Rate (CBR) steady at 11.5 percent but said it “shall take appropriate action to ensure that annual core inflation remains around the policy target of 5 percent in the medium term.”
The Bank of Uganda, which cut its rate by 50 basis points in December, said it still assesses the risk to the inflation outlook to the upside despite better-than-expected inflation in the last few months.
“Monetary policy therefore has to balance current modest inflation outturn against the likelihood that inflationary pressures will rise over the medium term,” the bank said.
Uganda’s inflation rate eased to 6.8 percent in November from 8.1 percent and the bank said headline inflation eased further to 6.7 percent in December, reflecting mainly the decrease in transport and communication, beverages and tobacco prices.
Annual core inflation fell to 5.7 percent in December from 7.0 percent in November.
The bank forecasts inflation will edge further down in the near term, but rise to 6.5-7.5 percent in the latter part of 2014, with the rise depending on the exchange rate, changes in commodity prices and the degree to which economic activity spills over into cost and price pressures.
