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
Leather SMEs to be incubated at MTAC thanks to PTA bank
Processors of leather into final products are to receive specialized training following the purchase training equipment and machines by PTA bank to address the skills gap in the leather sector....
Arua receives fish farming equipment
Arua district fisheries department has received fish farming equipment to boost aquaculture in the district....
BMK petitions Parliament over KCCA plan approval
The proprietor of BMK group of companies, Dr.Bulaimu Muwanga Kibirige has petitioned Parliament over KCCA's refusal to approve his plans to develop a piece of Land he acquired from Buganda Road Primary School....
PPDA to launch Gulu office
The Public Procurement & Disposal of Public Assets Authority (PPDA) will officially launch its northern Uganda regional office in Gulu on Friday....
Mosonero has earned a living from rubbish
AFTER many years of staying home with nothing to generate income from, Justine Musenero now makes charcoal brickets from her home in Kawempe...
Solar energy usage gains momentum in Uganda
SOLAR energy usage in Uganda has gained momentum as residents of Mityana, Mubende and Gulu embrace the new technology...
Should medical students be subjected to pre-admission exams?
Yes
No
Can't Say
follow us
subscribe to our news letter