Bank of Uganda raises central bank rate to 12%

The Bank of Uganda (BoU) has raised its Central Bank Rate (CBR) by 225 basis points, moving from 9.75% to 12.0%. This decision, made by the Monetary Policy Committee, represents the bank's largest single rate increase since 2011.

The tightening of monetary policy aims to defend the weakening Ugandan shilling and curb rising inflation. The central bank cited escalating geopolitical tensions in the Middle East, which have contributed to higher global oil prices, increased freight costs, and general uncertainty in international financial markets. Additionally, the Cash Reserve Requirement (CRR) was increased to 13.5% from 11.0% to strengthen policy transmission.

While the rate hike is intended to support currency stability and contain inflation, it comes alongside a downward revision of Uganda’s FY2026/27 economic growth forecast, now projected at 6.0%-6.5% compared to the previous 7.0%-7.5%. The BoU expects headline inflation to reach between 7.0% and 7.5% over the next 12 months.