The Bank of Uganda maintained its central bank rate at 9.75 percent Thursday, assessment that the current policy remains appropriate despite heightened inflationary risks from the Middle East conflict.
While inflation stayed below the 5 percent medium-term target through April, the bank revised its near-term outlook upward. Core inflation is now projected to range between 5 percent and 5.3 percent over the next 12 months as higher energy costs begin to impact the economy. Officials noted that the conflict has already contributed to a 5.4 percent depreciation of the Uganda shilling between February and April.
The bank reported that the economy remains on an upward trajectory, with growth for the 2025-26 fiscal year projected between 6.5 percent and 7 percent. This expansion is supported by broad-based improvements in agriculture, industry and services. Over the medium term, growth is expected to average 8 percent due to stronger exports and increased business investment.
Governor Michael Atingi-Ego said future decisions will remain data-dependent as the bank monitors global headwinds. To anchor inflation expectations, the bank previously raised the cash reserve requirement to 11 percent in March.
The central bank rate band remains at plus or minus 2 percentage points. The rediscount rate is set at 12.75 percent and the bank rate at 13.75 percent.