BOU maintains central bank rate at 10.25%

The Deputy Governor of Bank of Uganda Michael Atingi Ego says inflation in the Financial Year 2024/25 is projected to remain low with uncertainties continuing to persist around the inflation outlook including possible energy hikes and unfavorable weather patterns affecting food supply.

This as he released the Monetary Policy Statement for June 2024 that releaved that the repo, a key rate at which the central bank lends to commercial entities, was maintained at 10.25 percent.

While economic conditions seem to be unforgivingly hard for business performance in the country, the central bank says inflation is expected to remain low at an average of 3.2 percent.

Inflation rose to 3.6 percent in May 2024 from 3.2 percent and in April, according to the Monetary Policy Statement.

While core inflation increased to 3.7 percent from 3.5 percent however economic growth for the financial Year 2024/2025 is projected between 6.0 percent and 6.5 percent rising above 7 percent in the coming years.

Atingi Ego says Uganda continues to face decreased capital inflows, headwinds to export growth and external service debt servicing partly due to rising global Interest rates.

“This, combined with declining budget support, has resulted in declining international reserves," he said.

"Coupled with concerns over debt affordability and constrained financing options, this has led to a downgrade of the country's sovereign credit rating, though with a stable outlook, reaffirming that these challenges are short-term."

Much as the monetary policy paints a brighter picture of the economy it is too early to tell whether it will get worse because of the down side risks