Uganda central bank holds key lending rate, says GDP growth moderating

Uganda’s central bank left its key lending rate at 9.0 per cent on Monday, its governor said, adding that economic activity was moderating.

A combination of slowing global economic activity and domestic factors like falling tourism and export earnings in the first 10 months of this year were expected to contribute to a slowing economy, Governor Emmanuel Tumusiime-Mutebile told a news conference.

In October, the central bank unexpectedly slashed its key rate by 100 basis points to 9 per cent, saying the move was to help revive the sagging economy. Economic growth was now forecast at 5.5 per cent to 6 per cent this year, sustained into 2020, Tumusiime-Mutebile said .

“A combination of persistent global geo-political tensions and uncertainty around trade policies and softening domestic private sector investment spending could generate headwinds to economic growth,” Tumusiime-Mutebile said.

Annual headline inflation rose to 3 per cent last month, from 2.5 per cent in October.

Tumusiime-Mutebile said core inflation was projected to remain below a 5 per cent target until the fourth quarter of 2020, with upside risks stemming from unpredictable weather patterns.

Like much of east Africa, for the last three months Uganda has seen heavy rains that triggered widespread flooding and deadly landslides. Extensive cropland has been inundated and homes destroyed. Collapsed bridges and flooded roads have left some regions cut off from major towns.