BoU further cuts lending rates

Bank of Uganda {BoU} policy committee last week reduced further the central bank rate for the eighth consecutive time,  to control the general rise in consumer prices.

This is because core inflation, the primary target of the bank’s policy, rose modestly above the target rate of 5 per cent to 5.1 per cent. In its monetary policy statement released after the meeting, the committee pointed out that core inflationary pressure had weakened somewhat over the past 12 months due to the relative stability of the exchange rate and subdued domestic demand. The bank also expects inflation to stabilize around the target in 12 months.

“With domestic inflationary pressures remaining subdued and given the continued weak growth prospects,  BoU judges that continued easing of monetary policy is appropriate,” the monetary policy statement said. “This will be consistent with achieving the core inflation target of 5 per cent over the medium-term and will also support the recovery of real output in the economy,” reads the statement in part.

The economy is expected to grow by 3.9 per cent in 2016/17 – the slowest rate in four years, and slower than earlier projections of 5 per cent. By James Otai

 

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