The Bank of Uganda’s Monetary Policy Committee raised the Central Bank Rate by 225 basis points from 9.75 percent to 12 percent at a special meeting, responding to exchange rate depreciation, higher energy and food prices, and growing risks that these pressures will spread to underlying inflation. The bank maintained the rate band at plus or minus 2 percentage points, setting the rediscount rate at 15 percent and the bank rate at 16 percent. Headline inflation increased to 4.6 percent in September from 4.1 percent in August, while core inflation rose to 3.7 percent from 3.5 percent. Over the next 12 months, core inflation is projected to average 5.5 percent to 6 percent and headline inflation 7 percent to 7.5 percent. External pressures include higher oil, freight and insurance costs, weaker capital inflows and a current account deficit that widened by USD 1.4 billion to USD 4.6 billion. The bank had already raised the Cash Reserve Requirement from 11 percent to 13.5 percent, effective Sept. 24, to absorb excess liquidity and strengthen monetary policy transmission. The growth forecast for fiscal 2026-27 was cut to 6 percent to 6.5 percent from 7 percent to 7.5 percent because of tighter financial conditions, exchange rate depreciation, geopolitical uncertainty and elevated energy prices. Growth is projected to strengthen to about 8 percent over the medium term as external pressures ease, supported by private investment, exports and anticipated oil sector developments.
Bank of Uganda raises Central Bank Rate by 225 basis points to 12 percent as inflation risks intensify
The Bank of Uganda raised the Central Bank Rate by 225 basis points to 12 percent to counter exchange rate depreciation and rising energy, food and underlying price pressures. It projects headline inflation of 7 percent to 7.5 percent over the next 12 months and cut its fiscal 2026-27 growth forecast to 6 percent to 6.5 percent.