Uganda CBR falls to 12 percent

December 14, 2016 in Business, Financial Services, Markets, Policy by Editor

Kampala December 14 – Uganda’s central bank shaved 100 basis points off its key rate the CBR in continuing efforts to restart an economy reeling from stagnation and to forestall the possible impact of inflation projected to rise on the back of poor performance.

In the fifth and final rate move for the year, Bank of Uganda Governor Central Bank Governor Emmanuel Tumusiime Mutebile announced 12 percentas the base rate for December 2016.

Mutebile said the continued easing of the monetary policy was aimed at boosting momentum in the economy.
“The economy is continuing to grow moderately driven mainly by public investment and the Bank of Uganda’s composite indicator for economic activity improved in August and September,” Mutebile said.

Although the Bank predicts a slight increase in inflation due to a rise in food crops and fuel prices, Mutebile says that it will remain around the medium term target of 5 percent for the next 12 months. But despite the progressive reductions in the CBR since April, the growth forecast remains subdued with 5 percent being projected for 2016/17 with modest gains expected to drive this to  5.5percent in 2017/18 rounding off to 6percent in 2018/19.

Annual core inflation rose to 5.2 percent in November from 5.1 percent in October and is expected to get worse during the first quarter of 2017 on the back of weak second rains this year.