Uganda’s central bank held its benchmark interest rate unchanged on Thursday for a seventh straight policy meeting, saying the current stance remained appropriate as policymakers assess the economic fallout from the conflict involving Iran.
The Bank of Uganda left its Central Bank Rate at 9.75 percent, where it has remained since October 2024, as officials weighed rising global uncertainty against relatively stable domestic inflation conditions.
Governor Michael Atingi-Ego said it was still too early to determine the full economic consequences of the conflict and its likely impact on Uganda’s economy, particularly through higher oil prices and global market volatility.
“It remains too early to fully assess the magnitude and the persistence of these effects of the conflict, as well as its implications for the Ugandan economy,” Atingi-Ego told reporters at a press conference in Kampala.
The decision underscores the cautious approach adopted by policymakers in many emerging economies as geopolitical tensions in the Middle East threaten to disrupt energy markets, fuel inflationary pressures and weaken global growth prospects.
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Uganda, a net importer of petroleum products, remains vulnerable to swings in international oil prices, which can quickly feed into transport and food costs and place pressure on household spending.
Inflation in the East African country remains relatively subdued despite global uncertainties.
Annual headline inflation rose slightly to 3.0 percent in April from 2.8 percent in March, remaining below the central bank’s medium-term target of five percent.
The governor said core inflation, which excludes volatile items such as food and fuel, was expected to average between 5.0 percent and 5.3 percent over the next 12 months, broadly in line with the bank’s policy objective.
The central bank has maintained a wait-and-see stance since late 2024 after a cycle of monetary tightening aimed at containing earlier inflationary pressures linked to global commodity prices and currency weakness.
Analysts said the latest decision reflected confidence that domestic inflation remains under control, while also acknowledging mounting external risks.
“The Bank of Uganda appears comfortable with current inflation trends, but external shocks remain the biggest concern,” said an economist at a Kampala-based financial consultancy. “The Iran conflict introduces uncertainty through energy prices, exchange rates and trade conditions.”
Uganda’s economy has continued to show resilience, supported by agriculture, services and public infrastructure investments, although growth prospects remain exposed to external developments.
The country is also preparing for increased oil production in coming years as work progresses on major energy projects, including the East African Crude Oil Pipeline linking Ugandan oilfields to the Tanzanian coast.
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Authorities have projected stronger economic expansion in the medium term, driven partly by investments related to the oil sector and improving regional trade activity.
However, economists warn that persistent geopolitical tensions could complicate the outlook by increasing import costs and tightening global financial conditions.
Central banks across Africa have adopted mixed policy responses in recent months as inflation pressures ease unevenly across the continent.
While some monetary authorities have begun cutting interest rates to support growth, others have opted to hold borrowing costs steady amid concerns over currency stability and global uncertainty.
Uganda’s shilling has remained relatively stable against the US dollar in recent months, helping contain imported inflation pressures.
Atingi-Ego said policymakers would continue monitoring global and domestic developments closely before making future adjustments to monetary policy.
“The current monetary policy stance remains appropriate,” he said.
