Uganda: BoU cuts benchmark rate to 12 per cent
In a move to spur domestic economic growth amid existing risks, the Bank of Uganda has cut the benchmark lending rate to 12 per cent from 13 per cent respectively.This was made known by the Governor of Bank of Uganda, Emmanuel Tumusiime Mutebile while presenting the monetary policy statement for December 2016. He said, "given that core inflation is forecast to remain around the medium term target of 5 per cent over the next 12 months, and in line with efforts to keep the domestic economic growth momentum, BoU believes that there is scope to continue easing monetary policy." While BoU Executive Director for Research, Adam Mugume was speaking about the development, he said the reduction in benchmark lending rate will unlock cheaper liquidity thereby prompting a drop in commercial interest rates. "The easing is more to do with stimulating economic activity, especially private sector credit. The domestic economy is continuing to grow, driven mainly by public investment. The outlook for private investment remains subdued, although measures of business sentiment remain above average" he said. Since April 2016, BoU has been battling with surge in commodity prices as Uganda's economy keeps experiencing internal and external shocks. This has been linked to slow economic growth rate of Uganda's economic partners.