Bank of Uganda has today (Oct. 2) held its benchmark lending rate (Central Bank Rate) unchanged, saying a recent spike in inflation was a temporary trend.
The National Statistics Bureau-Uganda Bureau of Statistics (Ubos) announced on Monday that annual inflation hit a 13-month high of 8 percent in September, up from 7.3 percent in August.
While addressing a news conference, Governor Emmanuel Tumusiime Mutebile said the increase in food prices, which was the main driver of a recent rise in inflation, would start to reverse towards the end of 2013 and the beginning of 2014.
"Given that core inflation is forecast to fall back to the BoU policy target over the medium term, I believe that it is warranted to maintain a neutral monetary policy stance for this month," Mutebile said.
He said commercial banks' lending to the private sector is starting to recover, with annual growth in bank credit at 9.1 percent in August, compared to 6.4 percent in June.
Recent revised official figures say the country's GDP grew at 5.8% in 2012/2013 up from 3.4% in 2011/2012.
Mutebile said given the improved indicators of stronger economic activity, the 6.0 percent economic growth projection for 2013/14 can be achieved.