The Bank of Uganda has raised the Central Bank Rate (CBR) from 9.75% to 12% following a special meeting of the Monetary Policy Committee on 14 October.

The 225-basis-point increase is the largest since 2011 and takes the rate to its highest level since early 2017. It is also the first change since October 2024.

The central bank cited the escalation of conflict in the Middle East, which has widened Uganda’s current account deficit, increased exchange rate volatility and intensified depreciation pressures on the shilling. The current account deficit widened by $1.4 billion to $4.6 billion, driven by lower commodity prices, reduced tourism receipts and rising oil prices.

Headline inflation rose to 4.6% in September from 4.1% in August. BoU now forecasts core inflation averaging 5.5–6% over the next 12 months and headline inflation at 7–7.5%. The bank had earlier raised the Cash Reserve Requirement to 13.5% from 11% to tighten liquidity.

The move is intended to contain inflationary pressures, limit second-round effects from higher energy prices and exchange rate depreciation, and anchor inflation expectations around the medium-term target.