June 4 (Bloomberg) -- Uganda’s central bank unexpectedly cut its key lending rate for the first time this year, saying slowing inflation gave it scope to support economic growth.
The Monetary Policy Committee reduced the benchmark interest rate to 11 percent from 11.5 percent, Bank of Uganda Governor Emmanuel Tumusiime-Mutebile told reporters in the capital, Kampala. All four economists in a Bloomberg News survey forecast the policy rate would remain unchanged.
“The balance of risks remain tilted towards lower inflation and sluggish economic growth,” he said. “Therefore, a slight easing of monetary policy is appropriate.”
Uganda’s annual consumer inflation rate dropped to 5.4 percent last month, reflecting easing food-crop prices, compared with 6.7 percent in April. The bank forecasts inflation at 6 percent to 7 percent in the fiscal year that begins July 1, Tumusiime-Mutebile said.
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