Uganda’s central bank kept its key lending rate unchanged at 9.75%, extending its cautious monetary policy stance as policymakers assess inflation risks from higher oil prices.
The Bank of Uganda maintained its Central Bank Rate at 9.75%, Governor Michael Atingi-Ego said on Thursday. The decision marked another consecutive hold as the central bank seeks to balance price stability with economic growth.
Inflationary pressures have increased in recent months, with annual headline inflation rising to 4% in July from 3.7% in June. Despite the increase, inflation remained below the central bank’s medium-term target of 5%.
The central bank said higher global oil prices had not yet generated significant second-round effects across the broader economy. Policymakers are nevertheless monitoring energy costs because a prolonged increase could raise transportation, production and food prices.
The decision also reflects Uganda’s relatively strong economic growth. The economy has continued to expand on the back of domestic demand, investment and activity in sectors including construction, services and agriculture.
Keeping the policy rate unchanged allows the central bank to assess whether recent increases in inflation are temporary or could become more persistent. A further tightening of monetary policy could help contain price pressures but would also increase borrowing costs for households and businesses.
Uganda’s economy is also preparing for increased investment linked to the country’s oil industry. The development of oil production and related infrastructure is expected to support economic activity, although it could also increase demand pressures as investment accelerates.
The shilling’s performance remains another consideration for monetary policymakers. A relatively stable currency can help limit imported inflation, particularly when global energy and commodity prices are rising.
The Bank of Uganda has maintained its focus on keeping inflation close to its 5% target while supporting sustainable economic expansion. The latest decision suggests policymakers believe the current interest-rate setting remains sufficient to contain inflation without unnecessarily restricting economic activity.
For businesses, the rate hold means there will be no immediate increase in the benchmark cost of borrowing. However, commercial lending rates are likely to remain elevated, keeping financing conditions relatively tight for companies seeking to expand.
Investors will now watch inflation and oil prices closely for signs of whether the central bank will maintain its current stance or adjust monetary policy at its next meeting.
The latest decision leaves Uganda’s benchmark rate unchanged at a level policymakers consider appropriate for maintaining price stability while allowing the economy to continue expanding.
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Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
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