Uganda's central bank left its key interest rate unchanged for the fourth time but extended credit relief measures and liquidity assistance to financial institutions as the economic recovery has lost momentum since mid-December due to a surge in COVID-19 infection rates.

Uganda's central bank kept its key interest rate steady for the third time as it trimmed its forecast for inflation this year due to the extent of the spare capacity in the economy at the same time the recovery from the pandemic gradually gains traction and risks to the near-term economic outlook ease.

Commercial banks operating in Uganda announced they will lower their interest rates on loans to businesses and individuals in the coming days. The announcement comes after Emmanuel Tumusiime-Mutebile, the governor of the Bank of Uganda (BOU), threatened to cap on the banks’ rates.

The Central Bank of Uganda has threatened to cap lending rates should commercial banks fail to quickly ease their lending interest rates consistent with Bank of Uganda’s ease in monetary policy.