Bank of Uganda stays January key lending rate at 11.5%

By Julius Businge

The Governor of the Central Bank of Uganda, Prof. Emmanuel Tumusiime Mutebile has today (Jan. 3) announced that they will maintain the policy lending rate-the Central Bank Rate (CBR) at 11.5%, the same as that of December last year after inflationary pressures continued to abate in December, 2013.

The Uganda Bureau of Statistics (Ubos) announced at the end of December last year that annual core inflation (which is targeted by the monetary policy) declined to 5.7% in December from 7.0% in November 2013, whereas annual headline inflation eased to 6.7% in December from 6.8%, reflecting mainly the decrease in transport and communication and beverages and tobacco.

Mutebile forecasts suggest that inflation will edge down further in the near term driven by improved food crop harvests, but rise to 6.5-7.5% in the latter part of 2014.

He said they will continue to monitor the global and domestic economic developments and their implications on the overall outlook for inflation and growth of the Ugandan economy.

Keeping the CBR unchanged, ideally means commercial banks won’t adjust their lending rates upwards, and, that means, the cost of borrowing will remain affordable to support GDP growth expected to jump to 6.5% in FY2013/14 from 5.8% a year before.