Interest Rates Inch Even Higher In May
Jun 19, 2003
Government spending is driving up interest rates despite a slight dip in inflation.
By Andrew Kanyegirire
Government spending is driving up interest rates despite a slight dip in inflation.
Speaking yesterday at the monthly Bank of Uganda (BOU) briefing, Dr. Michael Atingi-Ego said overall, interests rates for May had gone up. Atingi-Ego is the Director of Research at BOU.
“Interest rates on all maturities in the treasury bill market rose further during May 2003. The policy rates that is the rediscount and bank rates were raised from 15.83% and 16.83% in April 2003 to 16.58% and 17.58% respectively in May 2003,†Atingi-Ego said.
Similarly, the monthly weighted average (commercial banks) lending rate on shilling denominated loans rose slightly from 17.60% in March 2003 to 17.93% in April 2003.
As indicated in the finance minister’s budget speech, interest rates have been edging up on account of increased government expenditure.
“Government expenditure injects liquidity into the system and this is far and above what the economy can handle (so to mop up this excess liquidity) we have to raise the interest rates,†Atingi-Ego told journalists.
As if to indicate that the Bank’s monetary measures are working as planned, there was a general decline in price levels for the month of May.
“The annual headline inflation rate fell slightly from 10.9% for the year ended April 2003 to 10.7% for the year ended May 2003,†Atingi-Ego said.
The annual non-food crop (underlying) inflation rate fell also, from 4.3% in April 2003 to 3.8% in May 2003.
Underlying inflation is often taken to be a clearer measure of inflation, as it does not include the volatile prices of food crops.
In the commodities sub sector, total coffee exports realised an improvement both in terms of 33.4% higher volumea and 44.9% in value. This translates to 162,063 more (60kgs) bags and $6.94m respectively.
For non-traditional exports, the data for April shows a total value of $40.43m. This was a decline of $1.9m compared to March.
“Fish and its products remained the largest single commodity foreign exchange earner at 2,490.4 tonnes worth $7.76m which was exported in March 2003,†Atingi-Ego said. Ends
Government spending is driving up interest rates despite a slight dip in inflation.
Speaking yesterday at the monthly Bank of Uganda (BOU) briefing, Dr. Michael Atingi-Ego said overall, interests rates for May had gone up. Atingi-Ego is the Director of Research at BOU.
“Interest rates on all maturities in the treasury bill market rose further during May 2003. The policy rates that is the rediscount and bank rates were raised from 15.83% and 16.83% in April 2003 to 16.58% and 17.58% respectively in May 2003,†Atingi-Ego said.
Similarly, the monthly weighted average (commercial banks) lending rate on shilling denominated loans rose slightly from 17.60% in March 2003 to 17.93% in April 2003.
As indicated in the finance minister’s budget speech, interest rates have been edging up on account of increased government expenditure.
“Government expenditure injects liquidity into the system and this is far and above what the economy can handle (so to mop up this excess liquidity) we have to raise the interest rates,†Atingi-Ego told journalists.
As if to indicate that the Bank’s monetary measures are working as planned, there was a general decline in price levels for the month of May.
“The annual headline inflation rate fell slightly from 10.9% for the year ended April 2003 to 10.7% for the year ended May 2003,†Atingi-Ego said.
The annual non-food crop (underlying) inflation rate fell also, from 4.3% in April 2003 to 3.8% in May 2003.
Underlying inflation is often taken to be a clearer measure of inflation, as it does not include the volatile prices of food crops.
In the commodities sub sector, total coffee exports realised an improvement both in terms of 33.4% higher volumea and 44.9% in value. This translates to 162,063 more (60kgs) bags and $6.94m respectively.
For non-traditional exports, the data for April shows a total value of $40.43m. This was a decline of $1.9m compared to March.
“Fish and its products remained the largest single commodity foreign exchange earner at 2,490.4 tonnes worth $7.76m which was exported in March 2003,†Atingi-Ego said. Ends