Bank Of Uganda Holds Key Lending Rate At 10% For 3rd Time Amidst Reducing Inflation
Uganda’s central bank, Bank Of Uganda held its benchmark lending rate at 10% for the third time in a row on Thursday amid slowing inflation in Africa’s top coffee exporter.
Inflation declined to 9% in March from 9.2% in February, driven by easing food prices due to favourable weather as well as lower global commodity prices and improved supply chains.
“Absence of new shocks, inflation will continue decelerating and converge to 5% target by the end of 2023,” Michael Atingi-Ego, deputy governor at the Bank of Uganda, said, adding that “the Bank of Uganda projects that the current policy stance remains appropriate to contain domestic demand pressures while supporting economic recovery.”
Uganda, which had imposed stringent measures to contain the spread of the coronavirus, slashed rates to a record low of 6.5% last year to support growth. But the central bank has since maintained the rates at 10% since October last year as it aims to tame rising inflationary pressure.
Across East Africa, inflation has been driven in part by a historic drought in parts of Somalia, Ethiopia and Kenya, which has left some 22 million people on the verge of starvation, according to the United Nations.
