Bank of Uganda maintains key rate at 12 per cent

What the report says

The Bank of Uganda has kept its benchmark Central Bank Rate unchanged at 12 per cent, according to The Observer, after earlier tightening steps aimed at containing inflation and supporting the currency. Governor Michael Atingi-Ego said the stance is intended to be temporary and focused on preserving medium-term stability. The decision follows an October special meeting that lifted the rate from 9.75 per cent in response to a sharp shilling depreciation and related price pressures.

The central bank said inflation remains above its 5 per cent medium-term target. Headline inflation rose to 5.8 per cent in October from 4.6 per cent in September, while food inflation reached 7.6 per cent. The bank also increased its inflation outlook for the coming year, and noted that the earlier rate increase has not yet fully worked through the economy. In addition, it raised the cash reserve requirement to 13.5 per cent.

The Observer reported that the shilling averaged 4,170 to the dollar in October, weaker than a year earlier and below September’s level. That has widened pressure on imports, fuel costs and debt servicing, while also affecting borrowers with foreign-currency loans. The bank cut its growth forecast for the 2026/27 financial year, citing delayed oil production, drought and tighter financial conditions, though it still expects medium-term growth to recover. The report also flagged external risks such as further currency weakness and geopolitical tensions that could add to inflationary pressure.