The Bank of Uganda (BoU) has kept the Central Bank Rate (CBR) at 9.75%, citing stable domestic inflation and a resilient economy.
According to BoU, inflation trends have remained in line with projections, supported by monetary policy measures and reforms in the Interbank Foreign Exchange Market. These actions have strengthened the foreign exchange market and contributed to exchange rate stability.
Favorable food and energy prices, along with relatively low global inflation, have also played a role in controlling domestic inflation. Over the twelve months leading up to January 2025, annual headline and core inflation averaged 3.4% and 3.8%, respectively. However, in January 2025, headline inflation rose to 3.6% (from 3.3% in December 2024), while core inflation increased to 4.2% (from 3.9%), mainly due to rising service costs, particularly in passenger transport.
“Despite seasonal food price increases, near-term inflation remains manageable. However, the short to medium-term outlook is uncertain, largely due to external risks. The BoU forecasts annual core inflation to range between 4.0% and 5.0% in 2025, stabilizing in the medium term,” the statement reads.
Economic activity remains strong, with business confidence holding firm despite global economic challenges and slow private sector credit growth. The Uganda Bureau of Statistics (UBOS) reported a 6.7% real GDP growth in Q1 of FY 2024/25, up from 6.2% in the previous quarter and 5.6% in the same period last year. This growth was driven by a significant rebound in industrial activity.
Looking ahead, Uganda’s GDP is projected to grow by 6.0%–6.5% in FY 2024/25 and reach 7.0% in the coming years, supported by a stable macroeconomic environment, Increased foreign direct investment (FDI) in the extractive sector, Government initiatives for wealth creation, Growth in agriculture and anticipated oil revenue
The Monetary Policy Committee (MPC) acknowledged that while inflation may rise in the short term, it is expected to return to target levels in the medium term. However, uncertainties in the global economy could accelerate inflation and impact economic activity, necessitating a cautious monetary approach.
“The CBR remains at 9.75%, with bands at +/-2 percentage points. The rediscount rate is 12.75%, and the bank rate is 13.75%,” the committee said.
The MPC believes that the current CBR level effectively balances inflation control with economic growth. Future adjustments will depend on new data and risk assessments.
BoU Maintains Central Bank Rate at 9.75%
