The Bank of Uganda is contemplating further tightening the monetary policy to ensure inflation reverts to its medium-term target of 5%.

Inflation pressure will continue to rise in the near term, Deputy Governor Michael Atingi-Ego said in a recent statement, adding that the central bank rate was increased by 50 basis points to 9% to address the inflationary pressure.  

Headline inflation rose to 7.9% in July from 6.8% in June. 

According to the central bank’s forecast, inflation will remain between 7% and 7.4% for the remainder of 2022, driven by lagged impact of higher exchange range depreciation, dry weather leading to a sharp rise in food crop prices, and a complete pass-through of global inflationary pressure.

Although economic growth will remain dim, growing at 2.5% to 3% for the current year, it will rise to 5% and 6% in 2023, partly supported by public investments and recovery in demand as inflationary pressure begins to wane, the statement said.

(Editing by Seban Scaria )