The Bank of Uganda reduced its central bank rate by 25 basis points to 10.00% on 7 August 2024, easing monetary conditions as annual headline and core inflation averaged 3.2% and 3.0% in the twelve months to July 2024, below the 5% medium-term target, with the MPC judging that the impact of past external shocks had abated and that it was appropriate to reduce slightly the degree of monetary policy restrictiveness.
Average inflation was below the 5% target, although headline and core inflation both edged up to 4.0% in July 2024, and the bank expected inflation to rise moderately over the following four months before stabilising around the target by the first quarter of 2025.
MPC OUTLOOK
The MPC described the move as a cautious easing and noted that risks of higher inflation remain.
The MPC noted that growth could be weaker if private sector credit slows further because of higher borrowing costs.
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