Bank of Uganda lowers Central Bank Rate to 13%
Bank of Uganda (BOU) has reduced the Central Bank Rate (CBR), to 13% in a bid to stimulate economic growth by stimulating demand in the economy.
BOU governor, Emmanuel Tumusiime-Mutebile made the announcement while reading the monetary policy statement for the month of October on Tuesday morning.
Mutebile announced that the CBR had been lowered from 14% to 13%, which is expected to lead to a drop in commercial bank interest rates and subsequently lead to more lending, investment and local spending.
“Given that core inflation is the forecast to remain around the medium term target of 5 percent over the next 12 months, there is room to support the domestic economic growth momentum especially against the ongoing global economic slowdown. Therefore, the BOU believes that there is scope to ease monetary policy,” Mutebile said.
The CBR has been lowered four consecutive times in 2016 alone, which is an indication of BOU’s desire to increase commercial bank lending.
The commercial bank interest rates have not dropped commensurately.