The Bank of Uganda cut its benchmark lending rate on Tuesday for the first time in two years in what it said was an aim to boost economic growth on easing inflation.
It cut the Central Bank Rate (CBR) by 50 basis points to 9.5% from 10.0 percent.
This is after Uganda’s inflation fell to 3.9% year-on-year in July, down from 10.4% in January this year and below the bank’s 5% target.
“Economic activity remaining below capacity over the next two years will exert further downward pressure on inflation.
In light of this outlook the MPC (Monetary Policy Committee) decided to lower the CBR to 9.5%, aiming to stimulate economic activity while maintaining inflation around the target,” said Bank of Uganda Deputy Governor Michael Atingi-Ego at a news conference.
Inflation slowdown was attributed to a drop in food and energy costs and tight monetary and fiscal policy among other factors.
Uganda’s economy has fared better than many of its East African peers owing to favourable weather and improved harvests.
This even as the apex bank said that growth seemed to be slowing down partly due to weak demand.
