By Nicholas Bariyo
KAMPALA Uganda–Uganda’s central bank kept its benchmark lending rate at 10% on Monday amid signs that inflation is easing in the country.
After rising to a multi-year high of 10.7% in October 2022, the inflation rate in the country decreased for two consecutive months, but increased slightly in January, reaching 10.4% from 10.2% the month of previously driven by steep food and energy prices.
“Inflation is expected to continue to decline in the coming months driven by lower energy prices and disruptions in the global supply chain,” said Michael Atingi-Ego, deputy governor at the Bank of Uganda. . “The Bank of Uganda projects that the current accommodative stance will support growth.”
This is the second time the central bank has kept rates on hold, after last year it raised rates by at least 350 basis points from a low of 6.5% to 10% to tame inflation. runaway.
While inflation is expected to ease, it should still remain elevated above the central bank’s target of 5%, at least until the second half of the year, Oxford Economics Africa said. The Bank of Uganda expects inflation to average 6.5% in 2023.
Inflation in the country is being driven in part by the worst drought in 40 years, which has left some 22 million people in the region on the brink of starvation, according to the United Nations.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
(END) Dow Jones Newswires
02-06-23 0641 ET
