Uganda’s central bank cut its key lending rate by 0.5 percentage points to 9.5% from 10%. in an attempt to revamp the country’s economic and private sector credit growth rate.

Bank of Uganda Governor Emmanuel Tumusiime-Mutebile said the upside risks to inflation remain muted, with the exception of the possibility of higher food prices due to crop pests that are affecting agricultural sector and severe rains in some parts of the country and a possible instability in the exchange rate.

According to Mutebile, the economy is projected to improve growth from 3.9% (2016/2017) to 5-5.5% in FY2017/18, which is a bit lower than estimates of potential GDP growth.

The CBR is the rate of interest which a central bank charges on loans and advances to commercial banks.

The Gross Domestic Product data released by Uganda Bureau of Statistics at the end of September indicated that Uganda’s economic growth rate recovered in the second half of Financial Year 2016/17, with a quarterly growth rate of only 0.6 per cent and 1.1 per cent being recorded in the first two quarters of the 2016/17 fiscal year, mainly because of bad weather that affected the agricultural sector.