The Bank of Uganda (BoU) has maintained the Central Bank Rate (CBR) at 9.75 percent, citing stable inflation and steady economic growth amid persistent global uncertainty.
In its Monetary Policy Statement for February 2026, the BoU Monetary Policy Committee (MPC) said the current policy stance remains appropriate to support economic activity while keeping inflation anchored around the medium-term target of 5 percent.
BoU reported that inflation remains contained. Over the 12 months to January 2026, headline inflation averaged 3.5 percent, while core inflation averaged 3.8 percent. Headline inflation edged up slightly to 3.2 percent in January 2026, from 3.1 percent in December 2025, driven by higher prices in some services, particularly passenger air transport.
Food crop inflation eased to 3.0 percent from 4.4 percent, supported by favourable weather conditions, while Energy, Fuel and Utilities (EFU) inflation rose modestly to 1.7 percent, largely due to increases in firewood prices.
Outlook: Inflation to Stay Within Target Range
The central bank said the inflation outlook has been revised slightly downward compared to the November 2025 forecast, reflecting a modest appreciation of the shilling and lower global oil and food prices. Inflation is projected to remain within the 3.8 to 4.3 percent range in 2026, before stabilising around the 5 percent target over the medium to long term.
However, BoU warned that risks to the inflation outlook remain elevated. On the upside, stronger domestic demand, expansionary fiscal policy, exchange rate pressures, geopolitical tensions and adverse weather conditions could push prices higher. On the downside, slower domestic activity, weaker global growth and declining commodity prices could ease inflationary pressures.
Economy Shows Steady Growth
Economic activity remained robust during the first three quarters of 2025, with average growth of 6.3 percent, largely driven by final consumption expenditure. Government consumption expanded by 22.8 percent, while household consumption grew by 14.2 percent.
BoU said high-frequency indicators point to stronger economic activity in the quarter to December 2025 and into the second half of the financial year. Growth for FY2025/26 is projected in the range of 6.5 to 7.0 percent, with medium-term growth expected to strengthen further to about 8 percent, supported by public investment, oil-related developments, infrastructure projects and rising private sector activity.
Interest Rates Unchanged
Against the backdrop of heightened global uncertainty and the balance of risks to inflation and growth, the MPC kept the CBR unchanged at 9.75 percent. The central bank said the decision is consistent with its strategy of guiding inflation towards the target over the medium term, while supporting economic stability.
Under the current policy framework, the rediscount rate and bank rate remain at 12.75 percent and 13.75 percent, respectively.
BoU said future policy decisions will remain data-driven, guided by ongoing assessments of domestic and global economic conditions.
