Thursday marked the third consecutive day that Uganda’s central bank kept its benchmark lending rate at 10%, despite declining inflation in the continent’s leading coffee producer.
Inflation decreased from 9.2% in February to 9% in March due to a decline in food prices, as a result of favorable weather conditions, decreased global commodity prices, and improved supply chains.
According to Michael Atingi-Ego, the deputy governor of the Bank of Uganda, “absent new disruptions, inflation will continue to decelerate and converge to the 5% target by the end of 2023.” According to the projections of the Bank of Uganda, the current policy posture is still adequate to contain rising inflation and maintain economic growth.
After instituting stringent measures to curtail the spread of the coronavirus, Uganda lowered interest rates to an all-time low of 6.5% in 2017 to encourage economic growth. In an effort to rein in rising inflationary pressure, the central bank has maintained rates at 10% since October of last year.
Some 22 million people are on the verge of starvation due to a severe drought in Somalia, Ethiopia, and Kenya, and this has contributed to inflation throughout East Africa.
