MONETARY POLICY
Uganda tightens interest rate to ward off threats to inflation target
A newly introduced tax on social media, rapidly rising oil prices and a weaker shilling exchange rate have all helped push up inflation
Kampala -Uganda’s central bank raised its key lending rate by 100 basis points to 10% on Wednesday, the first increase in three years, amid concern over rising inflationary pressures. "Inflation is on an upward trajectory and core inflation is projected to rise above the target of 5% within the next 12 months," the Bank of Uganda’s (BoU) governor, Emmanuel Tumusiime-Mutebile, said. Razia Khan, chief economist for Africa at Standard Chartered Bank, said it was no surprise that Kampala’s central bank raised the rate, given the likelihood that fuel price increases and a more volatile external environment pose a threat to the achievement of its inflation target in 2019. "Growth in Uganda is also expanding, with more expansionary fiscal policy," Khan said. "Having not tightened in August, a rate hike of this magnitude makes sense." A newly introduced tax on social media, rapidly rising oil prices and a weaker shilling exchange rate have all helped push up inflation, Tumusiime-Mutebile sa...
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