Full Breakdown
Bank of Uganda Maintains Key Interest Rate Amid Economic Uncertainty
2/10/2026, 6:10:37 PM
Central Bank Rate Decision
The Bank of Uganda (BoU) has decided to keep its Central Bank Rate unchanged at 9.75% for the sixth consecutive meeting, a policy that has been in place since October 2024. This decision comes as inflation remains below the bank's target of 5%, with the latest figures showing headline inflation at 3.2% in January 2026, a slight increase from 3.1% in December 2025. The BoU attributes the low inflation environment to a combination of tight monetary policy, coordination with fiscal authorities, a stable exchange rate, and easing global inflation.
Economic Growth Projections
Economic growth in Uganda is projected to be between 6.5% and 7% for the current financial year ending in June 2026. This growth is primarily supported by increased public spending and oil-related infrastructure projects, with the country set to commence commercial oil production later this year. The BoU anticipates that growth will strengthen to around 8% over the medium term, driven by ongoing public investment.
Inflation Outlook and Risks
The central bank expects inflation to remain slightly below its target throughout 2026, forecasting a range of 3.8% to 4.3% before stabilizing around 5% in the medium term. However, the BoU has cautioned that several risks could impact both inflation and economic growth. These include stronger domestic demand fueled by government spending, potential exchange-rate pressures, geopolitical tensions, and weather-related shocks affecting food supply.
Official Statements & Responses
Governor Michael Atingi-Ego emphasized that the current policy stance is appropriate for supporting economic activity while keeping inflation anchored. He noted that the BoU's future decisions will be data-dependent, reflecting the ongoing global and domestic uncertainties.
Criticism & Opposition
While the BoU maintains its position, some economists express concern regarding the potential for rising inflation due to increased government spending and external pressures. Critics argue that the central bank should remain vigilant and consider adjusting rates if inflationary pressures escalate.
Conflicting Reports & Gaps
There are varying opinions on the sustainability of Uganda's economic growth, with some analysts questioning whether the projected growth rates can be achieved given the current global economic climate. Additionally, the potential impact of geopolitical tensions on Uganda's economy remains a topic of debate among experts.
Verbatim Quotes
- “Governor Michael Atingi-Ego said the policy stance remains appropriate to support economic activity while keeping inflation anchored around the bank’s 5% medium-term target.” — Michael Atingi-Ego, Governor, Bank of Uganda
- “However, it warned that risks remain elevated, including stronger domestic demand driven by government spending, exchange-rate pressures, geopolitical tensions and weather-related shocks to food supply.” — Bank of Uganda Statement
In summary, the Bank of Uganda's decision to maintain its interest rate reflects a cautious approach amid global economic uncertainties, with a focus on supporting growth while managing inflation risks.
