BOU holds key rate at 9.75% as inflation eases

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The Bank of Uganda (BOU) kept its benchmark interest rate steady at 9.75%, saying inflation remained subdued and the economy was showing signs of strong recovery.

Michael Atingi-Ego, governor at BOU, said the decision was supported by prudent policy, a stable shilling, and lower energy prices.

Annual headline inflation fell to 3.4% in October from 4.0% in September, while core inflation dropped to 3.4% from 4.0%, largely due to easing prices in education, accommodation and other services. Food crops inflation also declined to 6.1% from 7.4%, helped by favourable weather, though energy and utilities prices rose slightly.

The central bank revised its inflation outlook slightly downward from August, projecting core inflation to range between 4.0% and 4.5% in the fiscal year 2025/26, below the 5% medium-term target. The revision was attributed to a stronger exchange rate and easing global inflation pressures.

“The overall outlook remains broadly balanced, shaped by both upside and downside risks, Atingi-Ego said.

Uganda’s economy grew by 6.3% in the 2024/25 financial year, up from 6.1% a year earlier, driven by stronger agricultural and industrial output.

Growth is projected to accelerate to between 6.5% and 7.0% in 2025/26, supported by the government’s tenfold growth strategy targeting agriculture, infrastructure, and extractive industries.