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Central bank raises benchmark lending rate to 17 pct

folarin okunola

October 20, 2015 3:30 PM

Policymakers in the east African nation started tightening monetary policy in April after the shilling weakened sharply against the dollar.

Uganda's President Yoweri Museveni smiles at Khartoum Airport during an official visit to Sudan September 15, 2015. REUTERS/Mohamed Nureldin Abdallah

Uganda's central bank raised its benchmark lending rate by one percentage point to 17 percent on Tuesday to stave off inflation, the bank's governor said.

Policymakers in the east African nation started tightening monetary policy in April after the shilling weakened sharply against the dollar. Five hikes since then have now raised the rate by 600 basis points.

"Inflation will continue to rise over the course of the 2015/16 fiscal year,"Emmanuel Tumusiime-Mutebile told a news conference, citing the bank's forecasts.

READ: Shilling flat, inflows may offer support

The rate increase would help ensure that medium-term inflation stayed within the bank's target of 5 percent, he said.

The governor told reporters the shilling, which has lost a quarter of its value against the dollar this year, had since stabilised and is likely to remain stable in the near term.

folarin okunola

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