The Bank of Uganda kept its benchmark interest rate unchanged at 12% on November 9, leaving borrowing costs at their highest level since 2017. This pause follows a sharp 225-basis-point hike in October aimed at supporting the weakening shilling and containing inflation.
The central bank stated that the current policy stance is sufficiently restrictive to address persistent inflationary pressures, noting that risks to the inflation outlook remain tilted to the upside. Annual headline inflation rose to 5.8% in October from 4.6% in September, while core inflation increased to 4.4% from 3.7%.
In response, the Bank revised its inflation projections higher, now expecting headline inflation to average 7.5–8% over the next 12 months. This adjustment reflects, in part, higher international oil prices and continued depreciation pressures on the shilling.
At the same time, the Bank downgraded its economic growth forecast for the 2026/27 financial year to a range of 5.5–6%, from a previous estimate of 6–6.5%, citing tighter financial conditions and increasing economic uncertainty.
