Uganda Keeps Key Rate at Record Low But Sees Prices Rising

KAMPALA (Capital Markets in Africa) – Uganda’s central bank maintained its key interest rate at a record low but warned that inflation is set to accelerate from a 3 1/2-year low.

The Monetary Policy Committee kept the benchmark rate at 9 percent, GovernorEmmanuel Tumusiime-Mutebile told reporters Monday in the capital, Kampala.

Growth in consumer prices slowed to 1.7 percent in May, the weakest level since 2014, and the risks to the inflation outlook in Africa’s biggest coffee exporter are on the upside, he said.

“Inflation is projected to return close to the medium-term target of 5 percent over the course of financial year 2018-19” as food prices recover, the governor said.

The economy probably expanded 5.8 percent in the year that ends June 30, with growth accelerating to 6 percent in the next fiscal year, Tumusiime-Mutebile said.