Uganda delivers first back-to-back rate cut since 2020

The monetary policy committee lowered the benchmark rate to 9.75% from 10%, Deputy Governor Michael Atingi-Ego told a virtual briefing on Monday.

Uganda’s central bank delivered its first back-to-back rate cut in four years on an improved inflation outlook.

The monetary policy committee lowered the benchmark rate to 9.75% from 10%, Deputy Governor Michael Atingi-Ego told a virtual briefing on Monday. The size of the reduction matched the cut in August.

“Risks to inflation are balanced,” and acknowledge inherent uncertainty in the outlook which warrant a caution monetary policy stance, Atingi-Ego said. Easing is necessary to keep inflation on track while supporting social economic transformation, he said.

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Uganda’s rate of annual and core inflation are below the 5% policy target. They both slowed in September to 3% and 3.7% respectively.

“Inflation has remained subdued which is reflecting the unwinding of the global shocks, a stable shilling exchange rate, partly due to strong coffee export receipts and moderate growth in imports and prudent monetary policy,” he said.

The shilling has been on a tear against the dollar since June, appreciating by almost 4% and helping to tame inflation. The US Federal Reserve easing policy by a half a percentage point last month also helped support the currency.

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