Bank of Uganda (BoU), Uganda’s central bank, kept its key rate at 6.5% this month, with the aim of containing inflation to 5% in the medium term while supporting the recovery of economic growth.
The latter, after contracting by 1.5% in 2020, rebounded at a rate of between 6.5 and 7% in 2021 according to data from the issuing institute, driven by investments in infrastructure and the recovery of tourism. For 2022, growth is projected at around 6% due to the continued easing of Covid-19 restrictions, and above 7% over the medium term.
Uganda is recovering from pandemic-related disruptions, but disruptions to the international supply chain and the resulting higher inflationary pressures could weigh on growth, the central bank noted.
“There could be a loss of growth momentum as global factors turn unfavorable,” BoU Deputy Governor Michael Atingi-Ego warned in a statement dated February 14, 2022. weighing on growth prospects remain on the downside”.
For its part, headline inflation slowed to 2.7% in January 2022, from the annual peak of 2.9% recorded in December. In the medium term, indicates the issuing institute, inflation should increase but stabilize around the 5% target, subject to the evolution of the pandemic.
