Uganda cuts lending rate for first time in 6 months

Uganda cut its key lending rate for the first time in six months yesterday, with the central bank citing easing inflationary pressures, weaker-than-thought household consumption and a stronger-than-expected local currency.

Governor Emmanuel Tumusiime-Mutebile said the Bank’s Monetary Policy Committee was cutting the Central Bank Rate by 100 basis points to 11 per cent.

This, he said, should be a signal to commercial banks to cut their rates. “Given the improvement in the inflation forecast and the need to further stimulate domestic demand to support the economy in 2013/14, the Bank of Uganda will reduce the CBR by one percentage point to 11 percent,” Tumusiime-Mutebile told reporters. 

“Private sector credit remains constrained by both the high bank lending rates and structural factors.”     

  ­—Reuters