Uganda’s central bank has decided to keep its main lending rate unchanged at 9.75 per cent for the fourth time in a row, as the country continues to monitor global economic challenges and the risk of rising prices. The decision was announced on Tuesday, August 12, 2025, by the Governor of the Bank of Uganda, Michael Atingi-Ego, during a press conference in Kampala.
Atingi-Ego explained that the Monetary Policy Committee (MPC) chose to maintain the current rate because of ongoing uncertainties in the global economy and the bank’s cautious approach to controlling inflation. He noted that the risks to inflation are currently limited, making it unnecessary to adjust the policy rate at this time.
The Governor said the inflation outlook remains almost the same as it was during the last policy meeting held in May. However, he pointed out that projections for the near term are now slightly better due to the recent stability of the Ugandan shilling against the United States dollar and a fall in global oil prices. This stability has reduced pressure on consumer prices, especially in sectors heavily affected by energy costs.
Data from the Uganda Bureau of Statistics shows that the country’s core inflation, which excludes food, fuel, and other volatile items, dropped to 4.1 per cent in July compared to 4.2 per cent in June. The fall in inflation was mainly driven by a reduction in services-related costs, indicating that sectors such as transportation, communication, and housing saw slower price increases.
The Bank of Uganda has a medium-term target of keeping core inflation at around 5 per cent. Atingi-Ego stressed that the current monetary policy stance is aimed at supporting economic stability while guarding against unexpected shocks that could push prices higher. He added that the bank will continue to closely monitor both domestic and global economic conditions, including currency exchange rates, oil price trends, and international trade developments.
Uganda’s decision to keep the rate unchanged comes at a time when many central banks around the world are balancing the need to fight inflation with the need to support economic growth. In recent months, the US Federal Reserve and the European Central Bank have signalled caution in making big changes to their rates, as global growth faces pressure from trade tensions, geopolitical conflicts, and slowing demand in major economies.
For Uganda, stable interest rates are also important for investor confidence and business planning. Higher lending rates could slow down borrowing and investment, while lower rates could fuel inflation if the economy grows too fast. By keeping the rate steady, the Bank of Uganda is signalling that it wants to avoid unnecessary volatility in financial markets and give businesses and consumers a predictable environment for decision-making.
Financial analysts in Kampala say the current environment is favourable for the Ugandan economy, especially with the shilling showing resilience against the dollar in recent weeks. This is partly due to increased inflows from exports, tourism, and remittances from Ugandans living abroad. The drop in global oil prices has also eased import costs, which helps to stabilise domestic prices.
However, experts warn that potential risks remain. A sudden rise in global oil prices, unexpected currency pressures, or renewed global trade disruptions could still affect inflation and the country’s economic outlook. The central bank has indicated that it will respond appropriately if any of these risks materialise.
The Bank of Uganda’s next monetary policy review is expected in a few months, and market watchers will be paying close attention to see whether the stable interest rate policy continues or if economic changes force an adjustment. For now, businesses, investors, and consumers can expect the lending environment to remain unchanged, with the central bank prioritising stability in the face of global uncertainty.
