Uganda’s central bank has kept its benchmark interest rate unchanged at 9.75% for the sixth consecutive policy meeting, citing subdued inflation and heightened global economic uncertainty, while maintaining a supportive stance for economic growth driven by public investment and oil-related projects.
The Bank of Uganda (BoU) on Monday held its Central Bank Rate at the level it has maintained since October 2024. Governor Michael Atingi-Ego said the current policy stance remains appropriate to support economic activity while keeping inflation anchored around the bank’s 5% medium-term target.
Inflation continues to run well below that target. Headline inflation rose marginally to 3.2% in January 2026 from 3.1% in December, largely reflecting higher prices in some service sectors, including air transport. Over the past year, headline inflation averaged 3.5%, while core inflation averaged 3.8%, according to the central bank.
The BoU attributed the low inflation environment to tight monetary policy, improved coordination with fiscal authorities, a relatively stable exchange rate and easing global inflationary pressures. Food prices moderated sharply in January due to favourable weather conditions, offsetting modest increases in energy and fuel costs.
Looking ahead, the central bank expects inflation to remain slightly below target in 2026, within a projected range of 3.8% to 4.3%, before gradually stabilising around the 5% target over the medium term. However, it cautioned that risks remain elevated, including stronger domestic demand driven by government spending, potential exchange-rate pressures, geopolitical tensions and weather-related shocks that could disrupt food supply.
Economic growth remained robust in 2025, averaging 6.3% in the first three quarters of the year, supported mainly by consumption, particularly increased government expenditure. Growth for the current financial year ending in June is projected at between 6.5% and 7%.
Over the medium term, the BoU expects growth to strengthen further to around 8%, underpinned by higher public investment and major oil-related infrastructure projects. Uganda is preparing to begin pumping commercial volumes of crude oil later in 2026, a development expected to provide a significant boost to economic activity.
The central bank said continued global and domestic uncertainty warrants a cautious monetary policy stance, adding that future decisions will remain data-dependent.
