Bank of Uganda hikes 225 basis points to 12% at a special meeting as the shilling weakens
Victoria Shinder2 min readThe Bank of Uganda's Monetary Policy Committee raised the Central Bank Rate by 225 basis points, from 9.75% to 12.0%, at a special meeting on 14 October 2026, according to the statement signed by Governor Michael Atingi-Ego.
Why now. The MPC said the global environment has changed significantly since its August meeting, mainly because of the escalation of the conflict in the Middle East. That has widened the current-account deficit, increased exchange-rate volatility and intensified depreciation pressure on the shilling. The deficit worsened by US$1.4 billion to US$4.6 billion, as lower coffee and cocoa prices and weaker tourism receipts hit income, while freight costs pushed the services deficit to US$3.3 billion. Global risk aversion and higher rates in advanced economies have made Ugandan assets less attractive, limiting capital inflows.
Inflation turning. Headline inflation rose to 4.6% in September from 4.1% in August, driven by food crop prices and fuel as the weaker shilling began to pass through. Core inflation climbed from 3.0% in May to 3.7% in September — still below the 5% medium-term target, but a sign that cost pressures are broadening. The outlook was revised up: core inflation is now projected at 5.5–6.0% and headline at 7.0–7.5% over the next 12 months, with risks tilted to the upside. The statement warns that the fuel shock, depreciation and El Niño weather could entrench inflation if policy does not act now.
Growth. Growth is estimated at 6.4% for the quarter to September, down from 6.8%, and the FY2026/27 forecast was cut to 6.0–6.5% from 7.0–7.5%; the medium-term projection remains about 8%.
The full package. The Bank had already raised the cash reserve requirement to 13.5% from 11% with effect from 24 September. The CBR band stays at ±2 percentage points, giving a rediscount rate of 15.0% and a bank rate of 16.0%. The MPC said it stands ready to take additional measures as warranted.
Source: Bank of Uganda, Monetary Policy Statement for October 2026 — https://bou.or.ug/uploads/MPS_October_2026_cdc1de720f.pdf