Bank of Uganda has maintained the Central Bank Rate (CBR) at 9% after reducing it from 9.5% in the last monetary statement of March 2018.
While delivering the Monetary Policy Statement (MPS) for April 2018 on Monday, Governor Emmanuel Tumusiime Mutebile noted that that the economic growth outlook is more positive than was forecast at the Monetary Policy Committee (MPC) meeting of February 2018 and there are signs of increased business confidence.
Mutebile said that Economic growth is projected at an average of 6.5 percent in the next three years. At these economic growth rates, the negative output gap, which was estimated at about minus 2.0 percent in the FY 2016/17, is expected to close in FY 2018/19.
Mutebile said that maintaining the CBR of 9% is still consistent with supporting economic growth and achieving the inflation target over the medium term.
He revealed that contrary to what most Ugandans believe, the economy is growing at the right pace and is expected to grow more in the next three years.
According to the MPS, the composite index for economic activity (CIEA), which is used by BoU as a measurement for real economic activity growth, projects a growth of about 6.4% in February 2018.
Referring to the Uganda Bureau of Statistics (UBoS) quarterly Gross Domestic Product (GDP) Mutebile explained that economic growth is at 6.3% in 2017 compared to 3.0% in 2016.
UBoS figures further show that the inflation has remained subdued with the annual inflation rate at 2% in March 2018, a slight reduction from 2.1% registered in February 2018. The core inflation remained unchanged.
The reduction in the annual inflation is attributed to decline in food crop inflation which dropped to -1.7% from -0.7% in February 2018, energy fuel utilities inflation also declined to 10.3% in March from 11.2% in February 2018.
Mutebile noted that there was growth in all major sectors: the agricultural sector grew by 6.1% in 2017 from -0.4% in 2016; the service sector grew by 8.1% from 4.5%; while the industry registered a slight growth from 4.2 in 2017 to 4.4% in 2018.