Bank of Uganda holds benchmark lending rate at 11.50 percent

Uganda's central bank held its benchmark lending rate at 11.50 percent on Tuesday, in line with the expectations of three out of five analysts after inflation edged higher in January.

Of the analysts contacted by Reuters, two had expected a cut in the rate. The central bank, Bank of Uganda, had also kept the rate steady in January after an unexpected cut in December.

Uganda's headline inflation rate rose to 6.9 percent in January from 6.7 percent a month earlier.

"Although core inflation has decelerated, helped by recent Ugandan shilling appreciation, food prices - which have risen strongly in recent months - are still a concern," Standard Chartered economist Razia Khan said in a note.

Khan, who had expected rates to remain steady, said the growth forecast was robust, despite a conflict in South Sudan, a major trading partner on Uganda's border.

Bank of Uganda Deputy Governor Louis Kasekende told a news conference bank forecast inflation - both headline and core rates - would average between 5 to 6 pct in first half of 2014

"Real GDP growth for 2013/14 is projected at between 6-6.5 percent. Domestic household demand is slowly gaining traction and is expected to continue to rise," he said. Reuters