Uganda Central Bank cuts main lending rate by 50 points to 11.5%

Uganda’s Central Bank cut its benchmark lending rate by 50 basis points to 11.5 per cent after the economic growth outlook worsened due to poor weather, its governor said on Wednesday.
Emmanuel Tumusiime-Mutebile said the economic growth forecast for the fiscal year from last July had been lowered to 4.5 per cent from a previous forecast of five per cent.

“The Bank of Uganda judges that a further cautious easing of monetary policy is warranted to support economic activity,” he told a news conference.
He added that the cut was consistent with short-term inflation expectations.

Some inflationary pressures attributed to higher oil prices are expected in the short term, but headline inflation was expected to remain within the medium-term target of five per cent, the bank said.

Uganda is also suffering from a drought across East Africa that has sent prices of staple foods soaring to record or near-record levels and could lead to food shortages in some areas, the U.N  Food and Agriculture Organisation (FAO) said on
Tuesday.
The interest rate cut is Uganda’s sixth in a row.

Policy makers began cutting the benchmark rate in April, bringing it back down from the peak of 17 per cent reached as the bank battled a surge in prices.