Uganda Interest Rate2011-2020 Data | 2021-2022 Forecast | Calendar | Historical

The Bank of Uganda lowered its benchmark lending rate to 8% during its April 2020 meeting, in a bid to cushion the coronavirus-induced deterioration in macroeconomic conditions and in order to ensure adequate access to credit and the normal functioning of financial markets Consequently, the country's economic growth is seen slowing drastically in the second half of 2019/2020 to 3-4% from a previous estimate of 6%. Policymakers added that although it is expected the GDP growth to gradually recover in the second half of 2020/2021, the emerging output gap is projected to persist until 2022. Meanwhile, inflationary pressures are expected to remain subdued, amid weaker domestic demand and lower external pressures in the face of the global downturn. Inflation is seen in the range of 2-3% in 2020, assuming that the COVID-19 pandemic is contained by June 2020 and the economy recovers gradually in the second half of 2020.

The Bank of Uganda held its benchmark lending rate at 9% during its February 2020 meeting, citing balanced risks to inflation and the need of maintain an accommodative monetary stance to support growth. In January 2020, headline inflation moderated to 3.4%, after hitting a 15-month high of 3.6% in December and is projected to remain low assuming stability in food prices and currency. The bank also kept its 2019/20 economic growth forecast of 5.5-6%, while expects it to accelerate to 6.3% in the medium term, though below the estimate of potential growth of 6.5%. Meantime, the Governor expressed concerns over export weakness, amid risks related to the recent coronavirus outbreak in China and agricultural production constraints due to uncertain weather patterns and a massive invasion of desert locusts.

The Bank of Uganda held its benchmark lending rate at 9% during its December meeting, after trimming it by 100 bps in the previous session, to support economic growth. Policymakers noted that economic activity has been moderating since the beginning of the year, due to a combination of a slowing global growth alongside domestic factors including lower tourism and exports earnings. The economy is now projected to expand in the range of 5.5% to 6% in 2019, and the pace sustained into 2020. Meanwhile, annual headline and core inflation rose to 3 percent and 2.9 percent in November, but still below the policy target of 5%. The inflation outlook in the short-term remained unchanged from the October 2019 forecast, although risks persist mainly due to unpredictable weather conditions. However, inflation is expected to converge to the target of 5% in the medium-term.

The Bank of Uganda slashed its benchmark lending rate by 100 basis points to 9% on October 7th 2019, reversing a 100 bps hike in October last year amid slower economic growth and lower inflation. The GDP growth slowed below 6 percent in the first and second quarter of 2019 while inflation rate continued to decline reaching near 1-1/2-year low of 1.9 percent in September. The inflation outlook was also revised downwards compared to the August forecasts and annual core inflation is now projected to remain below the 5 percent target until the fourth quarter of 2020.