By Our Reporter
NATIONAL/economy
The Bank of Uganda (BOU) has raised the Central Bank Rate (CBR). The CBR is the interest rates charged by a nation’s central bank for borrowed funds. Bank of Uganda is also known as the Lender of the Last Resort.
The raise in the CBR to 10% was announced today, 6th March, 2024 by the Deputy Governor, Michael Atingi-Ego who said the raise of the CBR was agreed upon by a Special Policy Committee that sat today, 6th March, 2026.
Atingi says some of the motivating factors behind the increase of CBR are; depreciation of the shilling exchange rate, the inflationary outturns that show an increase in inflation.
Atingi warns that if the monetary policy is not tightened the economy will witness a further depreciation of the shilling exchange rate that will in turn see inflation rise above 5%.
Risks to the inflation outlook were generally assessed by the MPC as being on the upside prompting the decision to raise the CBR.
“The risks to inflation outlook are elevated and this requires a tighter monetary stance. Therefore the MPC raised the CBR by 50 basis points to 10%. And the margins on the CBR for rediscount and bank rates at 3 and 4 percentage points, respectively,” Atingi says.
As a result, the rediscount and bank rates will rise to 13% and 14% respectively.
The Deputy Governor warns that going forward, “there are prospects for a higher CBR to bring inflation down and anchor inflation expectations.”
