Uganda central bank warns of more rate hikes

Bloomberg

The Bank of Uganda raised interest rates for a third straight meeting and signalled its willingness to boost rates further if inflation isn’t reined in.
Policy makers facing the most significant cost pressures in six years lifted the benchmark rate to 9% from 8.5%. That takes the increase in borrowing costs to 250 basis points since June.
“The inflationary pressures are still with us and there’s need to do everything possible to bring inflation back to target of 5%,” Deputy Governor Michael Atingi-Ego said. “Going forward, the MPC considers that the monetary policy stance will have to be tightened even further if inflationary pressures persist to ensure that inflation reverts to its medium-term target of 5%.”
Annual core inflation, which excludes food and energy, exceeded the central bank’s 5% medium-term target for a third successive month in July, accelerating to 6.3% from 5.5% in June. Headline price growth quickened to 7.9% from 6.8%.
Inflation forecasts for this year remain in 7% and 7.4% range. Last month, Uganda held first unscheduled monetary policy committee meeting to be called in Africa since Russia’s invasion of Ukraine upended supply chains and caused commodity prices to surge.
The rate hike means that Uganda has one of highest differentials between inflation and policy rates among more than 50 economies tracked by Bloomberg, making its assets more attractive to investors.