In Uganda Central bank raises benchmark lending rate to 17 pct

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

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

Uganda Minister of Finance Matia Kasaija displays a briefcase carrying national budget before presenting it to the nation during a budget speech in Uganda's capital Kampala, June 11, 2015. REUTERS/James Akena play Uganda Minister of Finance Matia Kasaija displays a briefcase carrying national budget before presenting it to the nation during a budget speech in Uganda's capital Kampala, June 11, 2015. REUTERS/James Akena

 

"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.

A man walks past stained glass windows inside the Gaddafi National mosque after Friday prayers in Uganda's capital Kampala in this Oct. 21, 2011 file photo. Although Uganda is largely Christian, Hassan Muwanguzi, who converted to Christianity from Islam, is being persecuted by Muslim extremists play

A man walks past stained glass windows inside the Gaddafi National mosque after Friday prayers in Uganda's capital Kampala in this Oct. 21, 2011 file photo. Although Uganda is largely Christian, Hassan Muwanguzi, who converted to Christianity from Islam, is being persecuted by Muslim extremists

(Reuters)

 

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.

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