- Decision
- Maintain
- Rate change
- 0 bps
- central bank rate
- 9.75%
The Bank of Uganda’s Monetary Policy Committee on 13 May 2025 kept the Central Bank Rate (CBR) at 9.75 percent, judging the existing stance adequate to keep inflation near the 5 percent medium-term target while supporting still-solid growth in an environment of “heightened global risks.” The decision extends the steady rate path in place since at least February 2025, when the CBR was likewise maintained at 9.75 percent. Operating parameters were unchanged, leaving the CBR corridor at ±2 ppts and the rediscount and bank rates at 12.75 percent and 13.75 percent, respectively. Headline inflation in April inched up to 3.5 percent and core inflation to 3.9 percent, but both remain below target and are projected to average 4.5–5.0 percent in FY2025/26 before converging on 5 percent thereafter. Real GDP grew by an average 6.0 percent in the first half of FY2024/25, and activity is forecast at 6.0–6.5 percent for the full fiscal year, buoyed by resilient household spending and investment in the extractive sector, though the committee warns the economy is nearing capacity limits. A stable exchange rate and lower global oil prices temper near-term price pressures, yet external uncertainties—ranging from geopolitical tensions to new trade restrictions and potential financial-market volatility—pose upside risks to inflation. The central bank reiterated that any future policy adjustments will depend on incoming data and evolving assessments of inflation and growth risks.
Rate evolution
From August 2025 to August 2026, the Bank of Uganda kept the Central Bank Rate unchanged at 9.75%, maintaining a cautious hold as inflation stayed modest and growth remained resilient. Early decisions stressed subdued headline and core inflation, helped by prudent monetary policy, a stable or stronger exchange rate, easing global inflation and favourable food and energy prices, while balancing that against external uncertainty from trade dynamics and geopolitics and domestic upside risks from exchange-rate pressures, public spending and adverse weather. By November 2025, the inflation outlook had shifted to broadly balanced as forecasts were revised lower, but in February 2026 the Bank again stressed elevated two-sided risks, adding possible demand pressures from a positive output gap and more expansionary fiscal policy, while still seeing growth strengthen even as risks to activity stayed tilted to the downside.
In May 2026, however, the Bank held the Central Bank Rate at 9.75% while judging that the Middle East conflict, higher oil prices and shilling depreciation had clouded the outlook, pushed the near-term core inflation projection up to 5.0-5.3%, tilted inflation risks to the upside and warranted an agile, data-dependent stance with readiness to act as needed, alongside a higher Cash Reserve Requirement to contain liquidity. In August, it again held the rate at 9.75% as lower international oil prices and a stabilising shilling improved the outlook and lowered the 12-month core inflation forecast to 4.0-4.5%, though risks remained tilted to the upside and concerns that higher food, fuel and other input costs could broaden inflation supported continued caution.