The Bank of Uganda dropped its new monetary policy interest rate (the central bank rate [CBR]) another 100 basis points to 21.00% from 22.00% previously. The rediscount rate and Bank rate were also reduced by 100 basis points to 25% and 26% respectively. Bank of Uganda Governor, Emmanuel Tumusiime-Mutebile, said: “Looking ahead, BoU will continue to conduct prudent monetary policy to bring inflation close to 5 percent over the medium term and also ensure a firm anchoring of the inflation expectations in line with the BoU’s aim of maintaining price stability”
The Ugandan central bank also cut the rate 100 basis points in February, and last increased its interest rate by 300 basis points in November, and 400bps to 20% in October, after hiking 200bps in September, and 100bps at its August meeting, and previously setting the new central bank rate at 13.00% at its June meeting. The Bank only recently began using the 7-day interbank rate to influence inflation, also commencing official targeting inflation; the Bank previously announced an inflation target of 7%, and noted it has a 5% core inflation target in its September press release.
Uganda reported annual headline inflation of 27% in December, down from 29% in November, and 30.5% in October, compared to previous readings of 28.3% in September, 21.4% in August, 18.8% in July, 18.7% in June, 16% in May, and 14.1% in April, while core inflation was 29% in December. Uganda reported annual GDP growth of 6.3% in the fiscal year to June, compared to 5.5% in the same period last year.
The Ugandan shilling (UGX) is flat against the US dollar over the past year; while the USDUGX exchange rate last traded around 2,466, off from the highest (2,885) on record (against a low of 1570 in 2008).
