Bank of Uganda has again maintained the Central Bank Rate at 11% in line with predictions by market observers. Addressing a press conference today [Dec. 12] in Kampala, Bank of Uganda’s Governor, Emmanuel Tumusiime Mutebile said core inflation [the target for the Central Bank]and GDP will trend close to their targets over the medium term and so keeping the rate unchanged was a wise decision.
Real GDP is projected to grow by 5-5.5% in 201415 from the estimated 4.5% last financial year. Core inflation is expected to be in the range of 2-4% in the next three months, Mutebile said, adding core inflation is expected to rise because of increased domestic demand over the forecast period. The Uganda Bureau of Statistics announced at the end of last month that annual headline inflation marginally went up to 2.1% in the year ended November 2014 from 1.8% in October while core inflation declined marginally to 2.3% in November, 2014 from 2.4% in October. Razia Khan from Standard Chartered Bank predicts there is going to be increased spending in the run up to Uganda’s 2016 election – suggesting that the next move in the CBR is more likely to be a hike than an easing.
Source : The Independent