The Bank of Uganda raised its rediscount rate to 16% and its bank rate to 17%, each up one percentage point. The committee wants more time to see how October’s 2.25-point policy rate increase affects borrowing costs and prices.
The Bank of Uganda kept its policy rate at 12% following its November 9 meeting. The Monetary Policy Committee widened the corridor around the benchmark to keep shilling liquidity tight. In the statement signed by Governor Michael Atingi-Ego, the committee judged that financing conditions were already tight enough as fuel costs rose and growth slowed.
Which rates changed for banks?
At a special meeting on October 14, the committee had raised its policy rate from 9.75% to 12%. The corridor then extended two percentage points on either side of the benchmark. In November the committee widened that margin to three points, lowering the floor from 10% to 9% and raising the ceiling from 14% to 15%.
| Rate | October 14 | November 9 |
|---|---|---|
| Policy rate | 12% | 12% |
| Interest rate corridor | 10%–14% | 9%–15% |
| Rediscount rate | 15% | 16% |
| Bank rate | 16% | 17% |
The committee set the rediscount rate four points above the policy rate and the bank rate five points above it. The central bank explains the decision and the margins at 8:39 in its November 9 briefing. The 17% bank rate applies to central bank lending. Commercial banks set the rates they charge their own borrowers.
Banks were already paying more to borrow from one another in October. The central bank’s November report puts the average overnight rate at 11.6%, up from 9.8% in September. The average rate on seven-day interbank loans rose from 10.3% to 11.9%. The committee said the economy had yet to feel the full effect of the October increase.
The Bank of Uganda’s November 10 summary of its decision and forecasts
The post loads from X when you open it.
Energy and food push inflation higher
Annual consumer price inflation rose from 4.6% in September to 5.8% in October. A weaker shilling made imports more expensive, while energy and weather shocks also pushed up prices. Food crop inflation climbed to 10.7% from 4.5%. Core inflation rose from 3.7% to 4.4%. The bank aims to keep annual core inflation close to 5% over the medium term.
Over the 12 months to October, headline inflation averaged 3.6% and core inflation 3.3%. For the next 12 months, the bank raised its forecast for average headline inflation from 7%–7.5% to 7.5%–8% and for core inflation from 5.5%–6% to 6%–6.5%.
The bank cited higher world oil prices and a widening current account deficit. If foreign investors bring less money into Ugandan securities, the shilling could weaken further and imports could cost more. Better weather could bring food prices down faster than forecast by boosting harvests. An easing of tensions in the Middle East could bring down oil prices sooner.
Why did the bank cut its growth forecast?
The Uganda Bureau of Statistics reported 6.8% growth for the quarter ending in June. Using data available ahead of the official figures, the central bank estimated growth at about 5.3% in the quarter to September. The bank attributed the slowdown partly to weaker conditions abroad and to the drought earlier in the year.
The bank cut its growth forecast for fiscal 2026/27 to 5.5%–6% from 6%–6.5%, citing tighter financing at home and abroad, higher energy costs and the shilling’s depreciation. Over the next five years it expects growth to average around 8% as private investment and exports rise and the oil sector develops. Delays in oil production or a shortage of shilling funding for lending could weigh on growth.
