KAMPALA, Aug 11 (Reuters) - Uganda’s central bank left its key lending rate unchanged at 10 percent on Friday and said economic activity was picking up while inflation remained on target.
Bank of Uganda Governor Emmanuel Tumusiime-Mutebile said the economy had gathered momentum in the first half of 2017 and would grow between 5 and 5.5 percent in 2017/18.
“Given the fact that inflation is expected to remain around the medium-term target and that economic activity is picking up, with output approaching potential ... the BoU will therefeore leave CBR unchanged,” Tumusiime-Mutebile told a news conference.
Tumusiime-Mutebile said the economy was expected to improve further going forward supported by the current accommodative monetary policy and fiscal stimulus measures outlined in the national budget for the financial year 2017/18.
He also cited recoveries in external demand and foreign direct investment and increased activity in the agricultural sector due to improved weather conditions.
Uganda’s overall inflation rate edged down to 5.7 percent last month from 6.4 percent.
But Tumusiime-Mutebile said both core and headline inflation figures were projected to be between 5 and 7 percent by the end of the year.
He said Uganda’s current account position had improved in 2016/17, with the deficit a percentage of GDP declining to 2.8 percent from 5 percent in 2015/16, supported by an 18 percent rise in export earnings compared with the previous year. (Reporting by Elias Biryabarema; Writing by Clement Uwiringiyimana; Editing by Catherine Evans)