Bank of Uganda Maintains Key Interest Rate Amidst Inflation Concerns

The Bank of Uganda (BoU) has opted to hold its central bank rate (CBR) steady at 9.75 percent, signaling a prudent monetary policy approach. This decision, announced on Thursday, August 13, 2026, by Governor Michael Atingi-Ego, comes as the Monetary Policy Committee monitors potential inflationary pressures stemming from increased energy and food costs.

While the broader economic picture shows improvement, with Uganda’s economy projected to grow significantly, recent weeks have seen an uptick in consumer prices. Annual headline inflation rose to 4.0 percent in July, up from 3.7 percent in June. This increase is largely attributed to a surge in Energy, Fuel, and Utilities (EFU) inflation to 14.9 percent, driven by global petroleum price hikes and a weaker local currency. Food crop inflation also turned positive, contributing to the upward price pressure.

However, core inflation, which excludes volatile food and energy components, remained stable at 3.4 percent. The central bank forecasts that core inflation will average between 4.0 and 4.5 percent over the next year, with headline inflation projected between 5.5 and 6.0 percent. Governor Atingi-Ego highlighted that risks to this inflation outlook are tilted upwards, with potential threats from geopolitical instability, adverse weather, and global interest rate changes affecting currency stability.

Despite these inflationary concerns, the Ugandan economy demonstrated resilience, expanding by an estimated 6.4 percent in the 2025/26 financial year. Growth is expected to accelerate in the coming year, boosted by private sector credit, consumption, and investment in the oil sector. The central bank’s decision to maintain the rate allows for further assessment of incoming economic data before any policy shifts are considered.

Source: https://www.monitor.co.ug/uganda/news/national/bank-of-uganda-holds-benchmark-rate-at-9-75-as-inflation-edge-prompts-caution-5557436