Uganda's central bank kept its key lending rate at 9.75% for the fourth monetary policy meeting in a row on Tuesday, citing global economic uncertainties and inflation risks.
"Given the global uncertainties and elevated risks to inflation, the MPC [Monetary Policy Committee] has opted for a cautious monetary policy stance," Bank of Uganda governor Michael Atingi-Ego told a press conference.
Atingi-Ego said the central bank had lowered its core inflation forecasts slightly from the last policy meeting in May, to between 4.5% and 4.8% in the fiscal year that started in July.
Uganda's core inflation slowed to 4.1% year on year in July, down from 4.2% in June, mainly because of lower services inflation.
The Bank of Uganda targets core inflation of 5% over the medium term, but it has been below that target, averaging 3.9% over the past 12 months.
The East African economy is forecast to grow between 6% and 6.5% this fiscal year, supported by exchange rate stability, rising agricultural output and increased investment in the extractive sector, the governor said.
"Growth prospects are favourable, yet subject to downside risks such as falling commodity prices, global supply chain disruptions, tighter financing conditions and adverse weather," Atingi-Ego said.
The Ugandan shilling is up about 4% against the dollar so far this year, helped by hard-currency inflows from exports of commodities like coffee.
Reuters
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