Kampala – The Bank of Uganda has maintained its lending rate (central bank rate) to commercial banks at 11.5 per cent, unchanged from last month.The central bank cited the likelihood of slightly high inflation levels in the medium-term as the reason for maintaining the rate.The current macro-economic outlook by the Bank of Uganda forecasts suggests inflation will go down further in the coming months, driven by improved food crop harvests, but rise to 6.5 - 7.5 per cent during the latter part of the year.“The potential increase in inflation and its timing will depend largely on movements in the exchange rate, changes in commodity prices, and the degree to which exchange rate, changes in commodity prices spill over in broader cost and price pressures,” Emmanuel Tumusiime Mutebile, the governor of the Bank of Uganda, told reporters in Kampala at a press to announce the central bank’s policy rate for January 2014. Mutebile said in spite of the better-than expected October-December inflation outcome, the central bank continues to assess the risks to inflation outlook to be on the upside.
