Bank of Uganda maintains central bank rate at 10%, announces drop in inflation

A statement released by the bank after a meeting convened by MPC on Thursday, April 6^th 2023 indicated that: “The economy has broadly evolved in line with our expectations at the February 2023 MPC meeting. The March 2023 data from the Uganda Bureau of Statistics indicated that annual headline and core inflations dropped to 9.0% and 7.6% in March 2023 from 9.2% and 7.8% in February 2023 respectively.”

“The annual fuel, electricity and utilities and as well as food crops inflations dropped to 4.4% and 26.7% in March 2023 from 5.2% and 27.4% respectively in February 2023,” it further indicated.

According to MPC, the decline in inflation is on account of a reduction in international commodity prices, improved global supply chains, and relative exchange rate stability due to tight monetary and fiscal policies.

The Ugandan Shillings, the statement indicated, has strengthened against major trading partners despite weakening against the US dollar, in part due to seasonal factors.

MPC said economic growth remains on a recovery path averaging at least 6.8% in the first two quarters of the Financial Year (FY) 2022/23, supported by stronger recovery in services and agriculture output.

The quarterly economic growth second quarter FY 2022/23, they added, dropped to 4.4% from 9.2% for first quarter FY 2022/23, due to a decline in industrial output and a moderation in services output.