By Taddewo Senyonyi
Bank of Uganda (BoU) on April2, 2014 maintained its benchmark rate, the Central Bank Rate (CBR), used for controlling inflation at 11.5% for the fifth time running, citing downside risks to economic growth.
This followed an increase in annual headline inflation in March to 7.1% from 3.7% in the previous month, anchored by higher food crop prices.
The BoU Governor, Emmanuel Tumusiime-Mutebile noted that while economic growth in 2013/14 was projected at around 6% and at 6.5% on 2014/15, supported by strong growth in public sector investment activities, downside risks to economic growth in the current fiscal year related to the weakness in credit growth and net exports remained a threat.
Positively, Mutebile said growth of Commercial Bank credit to the private sector picked up slightly in February 2014 but remains sluggish, with year-on-year growth of 6.8% which was below the BoU’s projections of 15% as set at the beginning of 2013/14.
“Average bank lending rates for Shilling denominated loans fell to 20.8% in February 2014, the lowest level since mid 2011,