The Bank of Uganda has increased its key policy rate, the Central Bank Rate (CBR) to 10% up from 9.5% during a special monetary policy meeting.
Deputy Governor Michael Atingi-Ego told a virtual briefing on Wednesday that the benchmark rate has been increased in a bid to curb inflation and support the battered shilling.
He added that core inflation increased to 3.4% in February from 2.4% in January, noting that central bank’s growth forecast for the financial year that ends in June remained unchanged at 6%, but that forecasts for future years had been lowered given tighter monetary policy.
“High inflation rates hurt economic growth, leading to significant and permanent reductions in per capita income. Therefore, tightening monetary policy in the current circumstances is consistent with supporting sustainable growth which is a prerequisite for socio-economic transformation,” said Atingi-Ego
Additionally, the shilling is down about 3% against the dollar so far this year, hitting a record low of about 3,955 against the U.S Dollar as of February, 26 before recovering in recent sessions, now at about 3,914.
