The Bank of Uganda (BOU) has kept its benchmark lending rate unchanged at 9.75%, citing the need for caution in the current economic environment despite low inflation and steady growth.
Inflation remains well below the BOU’s 5% medium-term target, averaging 3.4% over the past year. In July, headline inflation eased slightly to 3.8% from 3.9% in June, supported by stable food prices, lower passenger transport costs, and a strong shilling.
The central bank expects inflation to remain between 4.5% and 4.8% for the current fiscal year, underpinned by a stable exchange rate and falling global oil prices.
A stronger shilling, weaker global demand, or further declines in oil prices could push inflation lower. Conversely, currency depreciation, higher import costs from trade barriers, or increased government spending could reignite price pressures.
