The Bank of Uganda’s Monetary Policy Committee (MPC) has opted to maintain the Central Bank Rate (CBR) at 9.75%, signaling a cautious yet confident approach to navigating ongoing global economic volatility and geopolitical tensions.
The decision, announced on Tuesday, underscores the central bank’s balancing act of controlling inflation while fostering economic growth and socio-economic transformation.
The fiscal year 2024/25 showcased Uganda’s macroeconomic resilience, buoyed by strong coordination between monetary and fiscal policies. This partnership helped anchor investor confidence and preserve economic stability despite a challenging external environment marked by unpredictable commodity markets and geopolitical frictions.
Inflation remained well within manageable limits, with annual headline inflation averaging 3.4% and core inflation at 3.9%, both comfortably below the medium-term target of 5%. July 2025 figures indicated a modest easing, as headline inflation declined to 3.8%, supported by lower prices in food crops and services.
Uganda’s economy expanded by an estimated 6.3% in the past fiscal year, a slight improvement over the 6.1% growth recorded in FY2023/24. Key drivers of this growth include stable inflation rates, a steady exchange rate, and strategic government investments in infrastructure and the extractive industries.
Looking ahead to FY2025/26, the Bank of Uganda projects real GDP growth between 6.0% and 6.5%, buoyed by prudent monetary policy, rising agricultural production, and increased capital inflows into mining and oil sectors. Inflation is expected to edge closer to the 5% target, with core inflation forecasted between 4.5% and 4.8%, supported by a stable exchange rate, improved food availability, and favorable global oil prices.
However, the MPC cautioned that inflationary risks remain. A stronger Ugandan shilling and subdued domestic demand could exert downward pressure on prices, whereas potential exchange rate depreciation, rising import costs, and expansive fiscal spending pose upside inflation risks. The committee emphasized the need for vigilance to manage these dynamics effectively.
Alongside maintaining the CBR at 9.75%, the rediscount rate remains at 12.75% and the bank rate at 13.75%. The MPC indicated that future rate adjustments will be data-driven, responding to evolving economic indicators and external shocks. The current policy stance reflects a “cautious approach” aimed at sustaining economic momentum while safeguarding against inflationary shocks amid uncertain global conditions.
Market analysts view the MPC’s decision as prudent, reflecting a commitment to stability amid external risks such as fluctuating commodity prices and geopolitical unrest in key trading partners. Investors have welcomed the steady rate environment, which provides a predictable monetary landscape conducive to long-term planning and investment.
By maintaining the Central Bank Rate at 9.75%, the Bank of Uganda signals confidence in its current monetary policy framework to balance inflation control with growth stimulation. As the global economy continues to face uncertainty, Uganda’s focus on prudent fiscal and monetary coordination, infrastructure investment, and targeted sectoral support will be critical in sustaining economic resilience and achieving development goals in the coming years.
