BoU Holds Central Bank Rate Steady at 9.75%, Signals Focus on Stability Amid Global Uncertainty
The Bank of Uganda (BoU) has opted to maintain the Central Bank Rate (CBR) at 9.75% for August 2025, reflecting a cautious strategy to balance price stability with sustainable economic growth.
The decision, outlined in the Monetary Policy Statement, comes as Uganda navigates a challenging global environment marked by geopolitical tensions, fluctuating commodity prices, and shifting trade patterns.
The CBR, a key tool for influencing borrowing costs and savings returns, remains steady to keep core inflation close to BoU’s 5% medium-term target. Core inflation, which excludes volatile items such as food crops and administered prices, is projected to average between 4.5% and 4.8% in FY2025/26.
Recent figures show that in July 2025, headline inflation stood at 3.8% while core inflation was 4.1%, slightly down from June levels. The decline is largely attributed to falling food crop prices and lower passenger transport costs, supported by a stable exchange rate and favorable global energy and food prices.
Uganda’s economic growth continues to show promise. The Uganda Bureau of Statistics (UBOS) estimates GDP growth at 6.3% for FY2024/25, up from 6.1% the previous year, driven by low inflation, expanding exports, and infrastructure investment. For FY2025/26, growth is projected at 6.0%–6.5%, supported by rising agricultural output and investment in extractive sectors.
Nevertheless, risks remain. Rising import costs, a weakening shilling, adverse weather, and volatile global commodity prices could pressure inflation and constrain growth. Conversely, easing geopolitical tensions, increased infrastructure spending, and higher business confidence could boost economic performance.
Economists view BoU’s decision as a sign of prudent macroeconomic management, noting that future adjustments to the CBR will be guided by incoming data and careful monitoring of both domestic and global economic developments.
Key Highlights from BoU’s August 2025 Monetary Policy Statement:
Central Bank Rate: Maintained at 9.75%
Core Inflation: Projected 4.5%–4.8% FY2025/26
GDP Growth: 6.3% FY2024/25; projected 6.0%–6.5% FY2025/26
Supporting Factors: Prudent monetary policy, stable exchange rate, favorable global oil and food prices
Risks: Trade barriers, weaker shilling, extreme weather, declining commodity prices
By holding the CBR steady, BoU aims to provide a stable economic environment for households, investors, and businesses, demonstrating Uganda’s resilience amid global uncertainty.
