Uganda Cuts Rate

Bank of Uganda announced a cut in the Central Bank rate by 0.5 percentage points to 9% in the next three months as a measure for boosting private sector credit uptake and economic activities, AllAfrica reported. The governor, Emmanuel Tumusiime Mutebile, said the decline in headline inflation and core inflation from 3.3% and 3% last December to 3% and 2.6% in January 2018 respectively triggered the lowering of the policy rate. The CBR is used as part of monetary policy instruments to give direction to commercial bank lending rates for a particular period of time. “Given the objective of keeping inflation close to the target and the estimated spare capacity in the economy, a cautious easing of monetary policy is warranted to further boost private sector credit growth and to strengthen the economic growth momentum,” Mutebile said. The 9% rate is the lowest since 2011 when Inflation Targeting Lite was introduced to tame inflation that had jumped to 30%, the highest since 1993. The highest point, the CBR has been was 23% at the end of 2011.