Uganda Central Bank Holds Rate at 12% Amid Inflation Risks

The Bank of Uganda retained its benchmark rate while widening the policy corridor, citing persistent risks from energy prices and currency weakness.

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The Bank of Uganda maintained its Central Bank Rate at 12% in November, following an emergency increase in October.
Officials warned that shilling depreciation and rising energy costs could push inflation above the 5% target.

The Bank of Uganda (BoU) kept its Central Bank Rate (CBR) at 12% on Monday, November 9, preserving a restrictive monetary stance. According to Nile Post, Governor Michael Atingi-Ego announced the decision while presenting the November 2026 Monetary Policy Statement. The committee expanded the CBR corridor from two to three percentage points to allow more flexibility in managing liquidity.

This move follows an emergency rate hike in October, where the central bank lifted the CBR from 9.75% to 12% to curb rising prices. Nile Post reported that headline inflation climbed to 5.8% in October from 4.6% in September, while core inflation rose to 4.4% from 3.7% in the same period. These figures indicate increasing domestic price pressures that triggered the earlier rate increase.

Governor Atingi-Ego stated that the inflation outlook had worsened since the last meeting, leading to higher forecast revisions. He projected that core inflation would average 6% to 6.5% over the next year, while headline inflation was expected to range from 7.5% to 8%. Both figures exceed the 5% medium-term target. The BoU set the rediscount rate at 16% and the bank rate at 17% by adjusting the respective margins on the CBR.

The central bank cautioned that a weaker shilling, high global oil prices, and poor weather could worsen domestic price trends. A falling currency raises the cost of imported goods, fuel, and production inputs, which can increase prices in transport, manufacturing, and food sectors. Nile Post noted that Middle East developments are significant for Uganda's inflation because they influence international oil prices.

The governor described the restrictive policy as a way to ensure medium-term macroeconomic stability, which he called the foundation of the government's Tenfold Growth Strategy. He added that future decisions would depend on new economic data and the changing inflation outlook. Nile Post also mentioned that Democrats' win in the US midterms gave them Senate control, effective January 2027, though their impact on global energy markets is still unclear.

Uganda Central Bank Holds Interest Rate at 12% Amid Inflation Concerns

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