By Ahura Mujuni Mark
The Bank of Uganda has raised the Central Bank Rate (CBR) to 12 percent in September from 11 percent in August in a bid to anchor inflation expectations and to support economic growth over the medium to long term, Prof. Emmanuel Tumusiime-Mutebile Governor, BoU, has said.
The Governor announced the raising of the CBR while issuing the Monetary Policy Statement for September 2013 at Bank of Uganda Headquarters in Kampala on Tuesday.
“Uganda is currently facing a supply side shock to agriculture which has raised food prices and may also impede real growth in 2013/14.The risks to the outlook for core inflation over the next 12 months ,which is the target for monetary policy,have clearly increased.” read the policy statement in part
“Core inflation is likely to be pushed up directly because the higher food prices affect items within the core basket such as maize floor ,and directly to the extent that higher food prices feed through to the general price level through cost push effect and through their impact on inflation expectations’ adds the statement
“For the reasons outlined above ,I believe that it is warranted to raise the Central Bank Rate (CBR) by one percent point to 12 percent in September 2013 .Although the annual core inflation will probably remain above 6 percent for the next few months ,by tightening monetary policy now ,I am confident that it will fall back towards our policy target of 5 percent by the third quarter of 2014″ concludes the statement signed by Tumusiime Mutebile