By Taddewo Senyonyi
Bank of Uganda (BoU), on February,4, 2014 maintained the February 2014 Central Bank Rate (CBR) at 11.5% to further control inflation. This follows an increase in annual overall inflation (Headline inflation) to 6.9% in January from 6.7 in December 2013, largely on account of annual food crop’s inflation, which rose to 21.4% from 12.7% in December 2013, due to relatively high food prices in January 2013.
However, Annual Core Inflation (the measure of inflation that excludes prices of food crops, energy and utilities) declined to 4.6% from 5.7% in December 2013. BoU Deputy Governor Louis Kasekende while announcing the retention of the CBR at 11.5% said their forecasts indicate that average annual headline and core inflation are likely to remain in the range of 5-6 percent in the first half of 2014, increasing only gradually above the target over a 12-month horizon, as excess capacity is absorbed.
“Weighing the various domestic and external considerations, BoU judges that the balance of risks has remained virtually unchanged from the January 2014 Monetary Statement. Therefore, the Bank of Uganda will maintain the Central Bank Rate at 11.5% in February 2014,
