The Report from the Central Bank indicated that the demand for credit was very high but the Commercial banks had failed to respond positively due to fear of falling victim to the increasing none performing loans which had squeezed Uganda’s economy. Bank of Uganda Governor Prof. Emmanuel Mutebile noted that this prompted the Commercial bank to reduce the CBR. “This whole inflation is mainly focused on the medium-term target of 5%, and the economic activity is slowly gaining momentum, a conscious easing of monetary policy is warranted to boost private sector credit growth and to strengthen the economic growth momentum. The Bank of Uganda has therefore decided to reduce the Central Bank Rate (CBR) by 0.5% in points to 9.5%.” Said, Emmanuel Tumusiime Mutebile – Governor, BOU.

However, questions arose as to whether the reductions were having an impact on the economy? “Easing the more monetary policy over the 12 months has really had an impact on economic recovery.” Said, Dr. Adam Mugume – Director Research, BOU. Prof. Mutebile added that the country had accelerated to 1.8% and 1.9% respectively in the third and fourth quarter of the Financial Year despite a sluggish private credit sector growth. “That means that the growth rate of the economy is probably not as high as it should be and therefore we should do whatever it takes to get the Commercial banks to improve credit to the private sector.” Said the Governor BOU.

The September Monetary Statement indicates the economy suffered an annual headline inflation and core inflation imaginary of 5.3% from 4.2% but Prof. Mutebile attributed the increase to a rise in fuel prices on the market. Uganda’s economy was expected to grow at an annual rate of 5.0% to 5.5% in the Financial Year 2017/2018 which was lower than the estimated potential GDP growth.