Business
Uganda central bank holds rates, says concerned about lending
Publish Date: Apr 02, 2014
Uganda central bank holds rates, says concerned about lending
Bank of Uganda Governor Emmanuel Tumusiime-Mutebile
  • mail
  • img
newvision

KAMPALA - Uganda's central bank left its key lending rate unchanged on Wednesday, even though inflation rose last month, citing concern about sluggish credit growth and weak exports.

Bank of Uganda Governor Emmanuel Tumusiime-Mutebile said the economy is expected to grow 6 percent in the fiscal year 2013/2014, compared with 5.8 percent the fiscal year before. Growth should rise to 6.5 percent next fiscal year, he said.

"Given the outlook for the macro economy over the next 12 to 18 months, the Bank of Uganda believes that a neutral monetary policy stance is warranted in April 2014," Tumusiime-Mutebile told a news conference.

Inflation, however, rose to 7.1 percent in March from a revised 6.8 percent a month earlier, the Uganda Bureau of Statistics said on Monday. It was the first time inflation had edged above 7 percent since October 2013.

Tumusiime-Mutebile said annual core inflation is forecast to increase gradually over the course of next 12 months, to a range of 6 percent to 7 percent by April 2015.

The central bank has held its key lending rate since cutting it to 11.50 percent in December.

Tumusiime-Mutebile added that one of the main headwinds to the economy was the growth in commercial lending.

"Growth of commercial bank credit to the private sector picked up slightly in February 2014 but remained sluggish, with year-on-year growth at 6.8 percent, which was below the Bank of Uganda projections at the beginning of 2013/14," he said.

Traders said the central bank was prudent to hold rates.

"We think a rate hold was possibly the right move, because although there was a rise in inflation, the more urgent need is to boost the growth momentum, which would have been undermined by a rate hike," said Faisal Bukenya, head of market making at Barclays.

Reuters

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
‘There is massive potential to tap into local online businesses’
On his visit to Uganda recently, Hellofood Africa founder and CEO, Joe Falter revealed the massive investment potential that lies in online businesses....
Mrs Blair to support Ugandan women on financial literacy
Cherie Blair, the wife of former British Prime Minister Tony Blair, is to support 30,000 women in financial literacy, managerial and entrepreneurial skills....
Livestock farmers advised to exploit agriculture show
Livestock farmers across the country have been asked to go for this year's agriculture show that will take place in Jinja, to learn and improve on the productivity of their stock....
Uganda’s economy is on track
Lately, the public has been awash with myths and self-invented theories about the economy, the depreciation of the shilling....
Oil tumbles in Asia as Greek vote shakes world markets
Oil fell in Asia Monday as investors digested the implications of Greece rejecting tough austerity demands from creditors....
Gov’t cautioned on trade agreements signing
Government has been cautioned against signing international trade and bilateral agreements without scrutinizing their impact on indigenous business firms....
Do you think Ugandan graduates are the worst in the region?
Yes
No
Can't Say
follow us
subscribe to our news letter