Photographer: Martin Zwick/REDA&CO/UIG via Getty Images

Uganda's Central Bank May Revise Rates as Inflation Bottoms Out

  • MPC will assess impact of currency and oil price: Kasekende
  • Uganda kept its benchmark rate at a record low 9% in June

Inflation in Uganda could be bottoming out, prompting the central bank to consider raising its record-low policy rate, Deputy Governor Louis Kasekende said.

“Chances are that we might have to revise our stance on monetary policy,” Kasekende said in an interview in the Nigerian capital, Abuja, on Thursday. “We shall continue making those assessments to see how the increased oil prices and depreciation of the exchange rate work into prices and take appropriate action.’’

The Monetary Policy Committee in Africa’s biggest coffee exporter kept the benchmark rate at 9 percent last month, saying risks to the price outlook are on the upside. Inflation quickened to 2.2 percent in June, from a four-year low of 1.7 percent the previous month.

The weaker exchange rate and increase in international oil prices will push up inflation, Kasekende said. The shilling dropped to a record low against the dollar last month and is the worst-performer this year among East African currencies tracked by Bloomberg.

These are some other comments from the interview:

  • It’s too early to say if mobile-money tax will affect financial inclusion.
  • Most banks are meeting their capital requirements and non-performing loans as a percentage of total credit has improved to about 5 percent.

— With assistance by Fred Ojambo