The Bank of Uganda has reduced the benchmark lending rate for December 2013 to 11.5percent
In the last monetary policy statement for 2013, Dr Louis Kasekende, the Deputy Governor Bank of Uganda described the move as an “accommodative monetary policy stance.”
This is the first rate reduction since June 2013, driven by a need to boost private sector investment especially since the economy is still perceived to be growing potential.
Easing inflationary pressures have partly played a role in the decision made by Central Bank to cut the benchmark lending rate. Headline inflation declined to 6.8percent in November 2013 sustaining a three-month drop.
Core inflation declined marginally to seven percent from 7.1percent in October 2013, still within the medium term approach of Bank of Uganda.
Over the next 11 months, the central bank had projected that inflation would stay in the region of 6.5 to 7.5 percent falling back to about 5 percent in 2015.