Bank of Uganda (BoU) has reduced the Central Bank Rate (CBR) from 9.5 per cent to 9 percent. Mr Emmanuel Tumusiime Mutebile, the central bank governor while presenting the monetary policy statement for February 2018, said the move is aimed at further boosting the private sector credit growth and to strengthen economic momentum.
“Given the objective of keeping inflation close to the target and the estimated spare capacity in the economy, a cautious easing of monetary policy is warranted to further boost private sector credit growth and to strengthen the economic growth momentum,” he said.
The governor said the pace of economic activity strengthened in 2017. According to Bank of Uganda’s Composite Index of Economic Activity , the high frequency indicator of real economic activity, economic growth for 2017 is projected to be in the range of 5.0-6.0 percent compared to 2.5 percent in 2016.
In addition, there are indications of a revival in private investment activity as reflected by the recovery of Foreign Direct Investment, which grew by 18.5 percent in 2017 compared to a decline of 30.5 per cent in 2016; improving shilling credit extension by 10.8 percent in December 2017 compared to 7.9 percent in December 2016, and an increase of imports of raw materials and capital goods, which grew by 17.4 percent in 2017 compared to a decline of 21.1 percent in 2016.