The Bank of Uganda (BoU) Monetary Policy Committee (MPC) has maintained the Central Bank Rate (CBR) at 9.75%, citing the need to support economic activity while ensuring inflation remains stable around the medium-term target.

In its statement issued on 9 February 2026, the MPC said the current policy stance remains appropriate “to support economic activity while ensuring that inflation stabilises around the target over the medium to long term, amid persistent global economic uncertainty.”

Inflation Remains Below Target as Headline and Core Prices Edge Up

The Bank of Uganda reported that inflation continues to stay below the medium-term target of 5%, supported by prudent monetary policy, fiscal coordination, exchange rate stability, declining global inflation, and favourable food and energy prices.

Over the twelve months to January 2026, annual headline inflation averaged 3.5%, while core inflation averaged 3.8%.

Headline inflation increased slightly to 3.2% in January 2026, up from 3.1% in December 2025, largely due to higher inflation in some core components. However, the increase was partly offset by a decline in food crop inflation.

Similarly, annual core inflation rose to 3.3% in January 2026 from 3.1%, driven mainly by higher services inflation, especially passenger air transport.

Food crop inflation declined to 3.0% in January 2026, down from 4.4% in December 2025, supported by favourable weather conditions.

Meanwhile, Energy, Fuel, and Utilities (EFU) inflation rose slightly to 1.7% from 1.4%, due to modest increases in firewood prices.

Inflation Forecast Revised Downward

The MPC said the inflation outlook has been revised slightly downward compared to the November 2025 forecast, citing a modest appreciation of the exchange rate and lower international oil and food prices.

Inflation is projected to remain below target in 2026, ranging between 3.8% and 4.3%, before stabilising around the 5% target over the medium to long term.

This projection is supported by continued prudent monetary policy, stable exchange rate conditions, and moderating global commodity prices.

Bank of Uganda Flags Elevated Inflation Risks

Despite the positive outlook, the central bank noted that risks to inflation remain elevated on both the upside and downside.

Upside risks include stronger-than-expected domestic demand due to a positive output gap, partly linked to expansionary fiscal policy. Other risks include a persistently depreciated exchange rate, escalating geopolitical tensions disrupting global supply chains, and adverse weather conditions affecting agricultural output and food prices.

On the downside, risks include a sharper-than-projected slowdown in domestic activity, weaker global growth due to trade-related shocks, heightened uncertainty, and a decline in commodity prices that could reduce inflation further.

Economic Growth Steady as Uganda Posts 6.3% Average in 2025

The Bank of Uganda said economic activity remained steady in the first three quarters of 2025, recording average growth of 6.3%.

The growth was mainly driven by final consumption expenditure, which expanded by 14.7%, largely due to strong government consumption growth of 22.8%, compared to household consumption growth of 14.2%.

Although growth moderated in the two quarters ending September 2025, high-frequency indicators and forecasts point to higher activity in the quarter ending December 2025 and in the second half of the financial year.

The central bank projects economic growth in FY2025/26 within the range of 6.5% to 7.0%.

Medium-Term Growth Expected to Rise Toward 8%

Over the medium term, the Bank of Uganda expects growth to strengthen further to an average of around 8%, supported by accelerated public investment, oil-related developments, infrastructure projects, government initiatives, improving global conditions, prudent monetary policy, and increased private sector activity.

However, risks to growth remain tilted to the downside, including geopolitical tensions that could slow global growth, disrupt trade routes, and push commodity prices higher—particularly oil.

On the upside, stronger investment in the extractive sector, improved global recovery, and easing trade tensions could result in higher-than-projected growth.

BoU Maintains Rediscount Rate and Bank Rate Levels

The MPC said continued global uncertainty requires a cautious monetary policy stance. Based on the balance of risks to inflation and growth, the committee decided to keep the CBR unchanged at 9.75%.

The CBR band remains at ±2 percentage points.

The rediscount rate and bank rate remain set at 3 and 4 percentage points above the CBR, respectively, translating into a rediscount rate of 12.75% and a bank rate of 13.75%.

The MPC said the decision aligns with its strategy of guiding inflation toward the target over the medium term while supporting economic stability and socio-economic transformation.

The central bank added that future policy decisions will remain data-dependent and guided by ongoing assessments of domestic and global risks.