Kampala, Uganda | JULIUS BUSINGE |Bank of Uganda has kept the central bank rate at 10% for the next three months citing stability in inflation and positive economic activity going forward.
“Given that inflation is expected to remain around the medium term target and that economic activity is picking up with output approaching potential, a neutral monetary stance is warranted,” Mutebile said at the bank’s headquarters in Kampala on Aug. 11.
Uganda’s inflation reduced to 5.7% in the year ending July 2017 down from 6.4% recorded in the same period in June 2017, according to data from the Uganda Bureau of Statistics (UBOS) released on July 31. Annual core inflation declined to 4.5% in July compared to 4.9% registered in June 2017.
The BoU medium term inflation forecast remain largely unchanged at around 5% from those of the June 2017 of the monetary committee meeting.
However, Mutebile said there are upside risks to inflation including food crops prices and the path of the exchange rate which in part is contingent on external economic environment.
Meanwhile, Mutebile said the current account deficit continued to improve in FY2016/17, with the current account deficit as a percentage of GDP declining to 2.8%, down from 5% in 2015/16.