KAMPALA, November 10, 2026 – The Bank of Uganda [BoU] has maintained the Central Bank Rate [CBR] at 12 percent despite rising inflationary pressures driven by the depreciation of the shilling, higher international oil prices and the ongoing conflict in the Middle East.
The decision, announced today in Kampala by Governor Michael Atingi-Ego in the November 2026 Monetary Policy Statement [MPS], allows previous monetary policy measures more time to take effect as the central bank monitors price movements, exchange rate developments and the changing global economic environment.
However, the Bank has raised its inflation projections, warning that headline inflation could average between 7.5 and 8 percent over the next 12 months, while core inflation is expected to range between 6 and 6.5 percent.
The revised projections reflect higher international oil prices, a worsening current account deficit and reduced portfolio inflows, which could put additional pressure on the Ugandan shilling and increase the cost of imported goods.
Inflation has already started rising, with headline inflation increasing to 5.8 percent in October 2026 from 4.6 percent in September, while core inflation rose to 4.4 percent from 3.7 percent.
The Bank attributed the increase largely to energy and weather-related shocks, noting that the depreciation of the shilling and higher global energy prices were adding to domestic price pressures.
“Inflation has edged up, and several upside risks have materialised since the October 2026 MPC [Monetary Police Committee] meeting. The exchange rate depreciation and higher global energy prices, arising from the Middle East conflict, have added to inflationary pressures,” Atingi-Ego said.
Despite the recent increase, annual average headline and core inflation for the 12 months to October remained at 3.6 percent and 3.3 percent respectively, below the Bank’s medium-term target of 5 percent.
The Central Bank, however, cautioned that the full impact of higher fuel prices and the weakening shilling had not yet been reflected in the prices of other goods and services.
“The pass-through of higher fuel prices and the depreciation of the shilling to the prices of other goods and services, which was already evident in October, is continuing, with the full effects yet to materialise,” the statement reads.
The Bank identified further depreciation of the shilling, persistently high international oil prices and unfavourable weather conditions among the major risks that could push inflation higher.
It also warned that rising global food and energy prices could force central banks in advanced economies to maintain restrictive monetary policies or tighten further, resulting in more expensive international financing and additional pressure on the shilling.
To reinforce its monetary policy position, the Bank widened the corridor around the CBR from plus or minus two percentage points to plus or minus three percentage points.
The adjustment means the rediscount rate increased to 16 percent, while the bank rate rose to 17 percent. However, the benchmark CBR remained unchanged at 12 per cent.
The MPC said the adjustment was necessary to support tight shilling liquidity while maintaining the existing benchmark rate.
“The MPC therefore considered it appropriate to maintain the CBR at 12.0 percent. This decision allows sufficient time for the effects of previous policy measures to work through the economy, while enabling the Committee to continue assessing their impact, the evolving balance of risks to the inflation outlook, and developments in the global political landscape,” Atingi-Ego said.
The monetary policy decision comes as the economy experiences a slowdown in growth, prompting the central bank to lower its forecast for the current financial year.
According to the Bank, its high-frequency economic indicators show that economic growth moderated to approximately 5.3 percent in the quarter to September 2026, compared with the 6.8 percent reported by the Uganda Bureau of Statistics [UBOS] for the quarter ended June 2026.
The slowdown was attributed to the deteriorating global economic environment and the delayed effects of drought experienced during the first half of the year.
Business and consumer confidence have also weakened, although they remain optimistic, indicating that businesses and households have become less confident about future economic conditions.
The Bank has consequently revised its economic growth forecast for the 2026/2027 financial year to between 5.5 and 6 percent, down from its previous projection of 6 to 6.5 percent.
It attributed the revision to tighter domestic and international financial conditions, the depreciation of the shilling, elevated international energy prices and heightened geopolitical uncertainty.
“Growth has slowed to below its estimated potential rate, largely reflecting a deteriorating global environment and the lagged effects of the drought experienced in the first half of the year,” the statement reads.
Despite the near-term slowdown, the central bank expects economic growth to strengthen over the medium term, projecting an average of approximately 8 percent over the next five years.
The anticipated improvement is expected to be supported by increased private investment, stronger export performance, developments in the oil sector and continued implementation of government’s Tenfold Growth Strategy.
However, the Bank warned that delays in oil production, adverse weather conditions, tighter shilling liquidity, limited private sector credit and persistent global economic uncertainty could affect the growth outlook.
On the other hand, improved agricultural production, stronger investment in the extractive sector and easing tensions in the Middle East could support economic activity and reduce inflationary pressures.
Atingi-Ego said the Central Bank would continue monitoring economic developments and adjust its policy decisions according to incoming data and changes in the inflation outlook.
“The Bank of Uganda remains steadfast in its commitment to maintaining price stability in support of sustainable socioeconomic transformation. The temporary tightening is meant to secure medium-term macroeconomic stability, which is the bedrock of the ten-fold growth strategy,” he said.
The November decision to keep the CBR unchanged shows the Central Bank seeks to contain inflation without imposing additional monetary tightening at a time when economic growth is moderating.
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