(Bloomberg) — Uganda is leaning toward easing monetary policy but is biding its time amid potential headwinds including the outlook for oil prices, said Michael Atingi-Ego, deputy governor of the central bank.
“The aim is to ease,” he said in an interview Tuesday on the sidelines of an International Monetary Fund seminar in Mauritius. “We don’t want a situation where we ease and then we overshoot the target again because we didn’t take into account the uncertain economic outlook,” he said.
Uganda’s rate of inflation has declined from a 10.7% peak in October 2022 to 2.6% in December and has now been below the central bank’s 5% medium-term target for seven straight months.
That drop followed aggressive action from the central bank. Responding to signs of widening price pressures in the aftermath of Russia’s invasion of Ukraine, it raised its benchmark policy rate by a cumulative 350 basis points during 2022 to 10%.
It subsequently cut the rate to 9.5% in August and has kept it at that level since then, as it monitors external conditions including oil prices, policy actions by central banks in advanced economies and the risk of drought, which could have consequences for food prices.
“We’ve been constrained by the uncertainty in the outlook,” said Atingi-Ego. He declined to comment on when the Bank of Uganda would cut rates again.
Source: BNN Bloomberg
