The Bank of Uganda’s latest Interest Rate Decision, released on November 10, 2025, kept the policy rate unchanged at 9.75%. This marks the eighth consecutive hold since October 2024, following a gradual easing from 10.25% in June 2024. The decision aligns with the central bank’s cautious stance amid persistent inflationary pressures and external uncertainties.

Drivers this month

• Inflation steady at 6.80% YoY in October, slightly above the 5% target.
• Core inflation components such as food and energy prices remain elevated.
• Regional geopolitical tensions continue to pressure the UGX currency.
• Moderate GDP growth forecast of 4.20% for 2025 supports steady policy.

Policy pulse

The 9.75% rate remains above the historical average of 9.30% over the past five years, reflecting a cautious approach to inflation control. The central bank signals readiness to adjust if inflation deviates further from target.

Market lens

Immediate reaction: The UGX currency depreciated 0.30% against the USD within the first hour post-announcement, while 2-year government bond yields edged down by 5 basis points, indicating mild relief among investors.

Core macroeconomic indicators provide context for the interest rate stance. Inflation remains the primary concern, with the Consumer Price Index (CPI) rising 6.80% YoY in October 2025, down from 7.10% in August but still above the central bank’s 5% target. Food inflation, a significant driver, eased slightly to 8.20% YoY from 8.70% in September.

Monetary Policy & Financial Conditions

Monetary aggregates show moderate growth: M3 money supply expanded 8.50% YoY, consistent with credit growth of 7.90%. Lending rates averaged 14.20%, stable since mid-2024. The real policy rate remains mildly positive at approximately 3%, supporting controlled economic expansion without overheating.

Fiscal Policy & Government Budget

Fiscal deficits narrowed to 4.10% of GDP in FY2024/25, aided by improved tax collection and restrained spending. However, debt servicing costs rose to 12% of revenues, limiting fiscal space. The government’s commitment to infrastructure investment continues, balancing growth support with fiscal prudence.

Drivers this month

• Stable inflation trajectory supports steady rates.
• Currency volatility pressures limit easing scope.
• Moderate credit growth sustains demand-side balance.

Policy pulse

The unchanged rate reflects a neutral stance, balancing inflation control with growth support. The central bank’s forward guidance suggests vigilance amid external risks.

Market lens

Immediate reaction: UGX/USD spot rate slipped 0.30%, while 2-year bond yields declined 5 basis points, signaling cautious market optimism.

Looking ahead, Uganda’s monetary policy faces a complex environment. Inflation is expected to moderate toward the 5% target by mid-2026, assuming stable food prices and a resilient UGX. GDP growth forecasts remain positive at 4.00–4.50% for 2026, supporting steady demand.

Bullish scenario (30% probability)

• Global commodity prices stabilize, easing inflation.
• UGX strengthens due to improved trade balance.
• Central bank cuts rates by 50 basis points by Q3 2026 to boost growth.

Base scenario (50% probability)

• Inflation gradually declines but remains near target.
• Monetary policy remains on hold through 2026.
• Fiscal consolidation continues, supporting macro stability.

Bearish scenario (20% probability)

• External shocks from regional conflicts disrupt trade.
• Inflation spikes above 7%, forcing rate hikes.
• Currency depreciation pressures intensify, raising borrowing costs.

Uganda’s interest rate decision to hold steady at 9.75% reflects a calibrated approach amid mixed signals. Inflation remains above target but shows signs of easing. External risks and currency volatility constrain aggressive easing. Fiscal policy remains supportive but limited by debt costs. Financial markets reacted moderately, signaling cautious confidence. The central bank’s balanced stance aims to sustain growth while guarding against inflation resurgence.

Continued monitoring of inflation drivers, currency dynamics, and geopolitical developments will be critical. The next policy meetings will likely hinge on inflation trajectory and external shocks, with flexibility to adjust rates as needed.

Key Markets Likely to React to Interest Rate Decision

Uganda’s interest rate decision influences several key markets, particularly those sensitive to regional monetary conditions and currency flows. Investors and traders should watch these instruments closely for price movements reflecting shifts in monetary policy expectations and macroeconomic fundamentals.

• UGSE: Uganda Securities Exchange equities often respond to interest rate changes through shifts in borrowing costs and corporate earnings outlook.
• USDUgx: The USD/UGX currency pair is directly impacted by interest rate decisions, reflecting capital flows and inflation expectations.
• BTCEUR: Bitcoin priced in euros can react to emerging market monetary policy shifts as investors adjust risk appetite.
• EABL: East African Breweries Limited’s stock is sensitive to regional economic conditions and interest rate changes affecting consumer demand.
• EURUSD: The Euro-Dollar pair reflects global monetary policy trends that indirectly influence Uganda’s external environment and trade.

FAQs

What is the latest Interest Rate Decision for Uganda?

The Bank of Uganda held the policy rate steady at 9.75% in November 2025, continuing the hold since October 2024.

How does the Interest Rate Decision impact inflation in Uganda?

The steady rate aims to balance inflation control, which remains above the 5% target but is gradually easing.

What are the risks facing Uganda’s monetary policy?

Risks include external shocks, currency volatility, and regional geopolitical tensions that could force rate adjustments.

Final takeaway: Uganda’s steady interest rate reflects a cautious, data-driven approach amid inflation moderation and external uncertainties, with flexibility to adapt as conditions evolve.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.