The Bank of Uganda lowered its key lending rate in a bid to spur economic activity as inflation remained below target.
The reduction in the central bank rate by 100 basis points to 9% marks the first adjustment to the benchmark since October 2018. The rediscount rate and the bank rate were set at 13% and 14%, respectively.
Uganda's GDP growth eased in the second half of financial year 2018-2019, with the domestic economic outlook clouded by global uncertainties, the central bank said.
Annual headline and core inflation fell to 1.9% and 2.5%, respectively, in September from 2.1% and 2.7% in August. The central bank partly attributed the decline to a relatively stronger shilling, tempered domestic demand and lower food prices.
Core inflation is projected to remain short of the central bank's 5% target until the end of 2020.
Bank of Uganda Governor Emmanuel Tumusiime-Mutebile said the benign inflation outlook leaves some room for a rate cut, which the central bank hopes would help narrow the output gap.
