Uganda Interest Rate2011-2020 Data | 2021-2023 Forecast | Calendar | Historical

The Bank of Uganda kept its benchmark interest rate steady at a record low of 7% during its December 2020 meeting, saying the economic recovery was gradually gaining traction amid the loosening of coronavirus restrictions, adding that growth would be above 3% in the financial year 2020-21. Still, economic growth is projected to remain below its potential until 2023/24. Meantime, inflation remains benign and it is projected to be well contained over the medium-term. Headline inflation fell to a six-month low of 3.7% in November from 4.5% in October, amid falling energy and food crop prices.

The Bank of Uganda kept its benchmark interest rate steady at a record low of 7% during its October 2020 meeting, saying economic growth for the next 12 to 24 months was likely to remain modest. Policymakers noted that high-frequency indicators for economic activity point to a mild recovery in Q3 with an estimated growth of 2% from a sharp contraction of 6% in Q2. Still, the GDP is projected to contract in the range of 0.2% to 0.5% in 2020. The overall risks to the inflation outlook appear to be on the upside in the near term, amid cost pressures emanating from higher taxes on imported consumer and intermediate products and social distancing measures. The annual headline inflation eased to 4.5% in September 2020 from 4.6% in August, but annual core inflation edged up to 6.2% from 5.9% in the same period. Meanwhile, inflation is expected to be well contained over the medium-term.

The Bank of Uganda left its benchmark interest rate unchanged at a record low of 7% during its August 2020 meeting, after slashing it by 100bps in June, citing an extremely uncertain economic outlook largely because of the unpredictable intensity and duration of the Covid-19 pandemic. Policymakers said that domestic economic activity is estimated to have contracted by 3.2% in the second quarter, but it is expected to slowly recover amid the gradual easing of lockdown restrictions. Therefore, economic growth is seen at around 3-4% in 2020, before picking up to 5-6% in 2021, but remaining below its potential level until 2022. Meanwhile, the balance of risks to the inflation forecast are assessed to be on the upside with core inflation expected to rise above the 5% target within 12 months, reflecting the influence of containment measures particularly on public transport and increases in prices of imported consumer goods as a result of higher taxes to support import substitution.

The Bank of Uganda cut its benchmark interest rate by 100bps to 7% on June 8th 2020, aiming to support the economy which has been battered by a coronavirus lockdown. It follows a similar 100bps cut in April and brings the borrowing cost to the lowest level since at least 2011.