Bank of Uganda raises Central Bank Rate by 1.0 percent to 17 percent

Kampala, Uganda, Capital Markets in Africa — Bank of Uganda has raised the Central Bank Rate (CBR) by 1.0  percentage points to 17 percent in October 2015, according to a Monetary Policy statement, issued by Governor Professor Emmanuel Tumusiime -Mutebile. This increase has resulted to cumulative increase of 6.0 percentage points in 2015, the previous increases were 1.0 percentage points (in April and June meetings) and 1.5 percentage points (in July and August meetings).

In the Monetary Policy statement, the band on the CBR is maintained at +/- 3 percentage points and the margin on the Rediscount rate at 4.00 percent on the CBR, therefore the Rediscount rate and the Bank rate is increased to 21.00 percent and 22.00 percent respectively.

The reason attributed to the monetary policy tightening is to ensure that medium term inflation converges towards the Bank of Ugandan policy inflation rate target of 5.00 percent.  The inflation experienced in September had risen, the annual headline inflation edged up to 7.2 percent from 4.8 percent in August 2015 and the annual core inflation rose to 6.7 percent  from 5.5 percent in August 2015.

The Bank of Uganda Monetary Policy committee, downgraded also the FY2015/2016 real GDP growth projection to 5.0 percent from 5.8 percent to be in-line with weakening of global economic outlook.

Furthermore, the statement highlighted that after sustained depreciation pressures since the beginning of 2014, the Ugandan Shillings had witnessed less volatility in the months of September and October 2015. However, the Governor cautious that the exchange rates volatility cannot be rules out due to the global economic conditions.

The Ugandan Shillings was the second worst African currencies in the 2015 (as at 16th of October 2015), but so far in the month of October (as at October 16), the Shillings had appreciated by twenty-two Shillings. See the chart above for the evolution of Ugandan Shillings from January 2014 to October 16th 2015. 

To read MPC’s statement click MONETARY POLICY COMMITTEE MEETING Release Statement


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