Uganda holds key lending rate at 10%

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Uganda’s central bank held its benchmark lending rate at 10 per cent for the second time in a row on Thursday, citing subdued inflation, the bank’s governor said.

Governor Emmanuel Tumusiime-Mutebile told a news conference in Kampala that economic growth was on a steady path, with output slightly ahead of the economy’s potential.

“The inflation outlook in the intermediate period has improved, largely driven by a relatively stronger shilling and a good crop harvest,” he said.

“The economy is projected to grow by about 6.3 per cent in fiscal year 2018/19 (July-June) and remain on a steady growth trajectory over the coming years,” Tumusiime-Mutebile said.

Policymakers raised rates for the first time in three years last October, citing concerns about rising inflationary pressures. They subsequently left them unchanged at their December meeting.

He said rising trade protectionism around the world could, however, hurt demand for Uganda’s exports, adding that the damage would might not be enough to dent this year’s growth forecast.

“The growth was partly supported by the bank’s accommodating policy stance and the effects of public infrastructure investments,” he said.