Uganda’s central bank has held its main interest rate steady for the sixth consecutive meeting, pointing to global economic risks and persistently low inflation.
On Monday, the Bank of Uganda (BoU) kept its Central Bank Rate steady at 9.75%, a level it has maintained since October 2024.
Governor Michael Atingi-Ego stated that this policy stance remains suitable for supporting economic activity while keeping inflation close to the bank’s medium-term target of 5%.
Inflation continues to be well below the target. Headline inflation rose slightly to 3.2% in January 2026, up from 3.1% in December, mainly driven by increases in some service sectors, such as air transport.
Over the past twelve months, the average headline inflation rate was 3.5%, while core inflation averaged 3.8%, according to the central bank.
The BoU noted that the subdued inflation reflects a combination of tight monetary policy, coordination with fiscal authorities, a relatively stable currency, and declining global inflationary pressures.
Food prices fell sharply in January due to favorable weather conditions, which helped offset modest increases in energy and fuel costs.
The central bank projects that inflation will stay slightly below target in 2026, ranging between 3.8% and 4.3%, before gradually aligning with the 5% medium-term objective.
However, it cautioned that risks remain significant, including higher domestic demand driven by government expenditure, potential currency fluctuations, geopolitical tensions, and weather-related shocks affecting food supply.
Economic growth averaged 6.3% during the first three quarters of 2025, largely fueled by consumption, particularly government spending.
For the current fiscal year ending in June, growth is expected to range between 6.5% and 7%.
Looking further ahead, the BoU anticipates medium-term growth could reach around 8%, supported by increased public investment and infrastructure projects related to the oil sector.
Uganda is set to start producing commercial volumes of crude oil later this year, a move expected to stimulate further economic activity.
The central bank emphasized that persistent uncertainty, both globally and domestically, justifies maintaining a cautious approach to monetary policy, and future rate decisions will continue to be guided by incoming economic data.