Uganda Holds Benchmark Interest Rate at 12%

Uganda’s central bank left its benchmark interest rate unchanged for a fifth month as core inflation remained above target.

The Bank of Uganda maintained the rate at 12 percent, Governor Emmanuel Tumusiime-Mutebile told reporters today in Kampala, the capital. That was in line with forecasts of three of four analysts surveyed by Bloomberg.

Consumer prices rose 3.4 percent in April from a year ago, down from 4 percent in March, according to the Uganda Bureau of Statistics. Core inflation, which excludes excludes food crops, electricity and metered water, slowed to 5.8 percent from 6.8 percent.

“The change in annual inflation is small and core inflation remains above the target of 5 percent,” Robert Katabaire, an economist at the Kampala-based Dyer & Blair Uganda Ltd., said by phone before the rate decision.

The 12 percent rate is the lowest since the Bank of Uganda introduced it as a monetary policy tool two years ago.

Expansion of manufacturing, construction, service sector and agriculture may spur economic growth in the 12 months through June to 6-7 percent from 3.4 percent a year earlier, according to the central bank. The 2011-12 growth rate was the lowest in 25 years for East Africa’s third-biggest economy, according to the Finance Ministry.

The latest growth forecast for Uganda, which relies on funding from the U.K., U.S., European Union, Denmark, Norway and Japan for a quarter of its budget, is an upward revision from 4.3 percent forecast after donors cut aid over concerns about government embezzlement.

To contact the reporter on this story: Fred Ojambo in Kampala at

To contact the editor responsible for this story: Paul Richardson in Nairobi at

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