MARKET DATA
Source: Cornerstone Asset Managers
MARKET NEWS
A cautious policy stance amid stronger growth and emerging inflation risks
The Bank of Uganda’s decision to maintain the Central Bank Rate (CBR) at 9.75% reflects a cautious approach to monetary policy. While Uganda’s economy remains resilient, with growth estimated at 6.4% in FY2025/26 and projected to accelerate to 7.0%–7.5% in FY2026/27, the Bank is allowing more time to assess inflation and external risks before making further changes to the policy rate.
The inflation picture is mixed. Although inflation remained moderate over the 12 months to July 2026, headline inflation increased to 4.0% in July from 3.7% in June, mainly due to higher energy, fuel, utilities and food-crop prices. The Bank expects core inflation to average 4.0%–4.5% over the next 12 months, while headline inflation is projected to average 5.5%–6.0%. This highlights the importance of monitoring energy prices, food supply and exchange-rate developments.
For investors, the key takeaway is that Uganda’s macroeconomic environment remains broadly constructive, but the outlook calls for selectivity. Stronger economic activity, infrastructure investment, private-sector credit and strategic sectors such as agriculture, industry, energy and extractives could create investment opportunities. However, geopolitical tensions, global inflation, adverse weather, higher energy costs and trade disruptions could put pressure on both inflation and growth.
The stable CBR therefore suggests a ‘wait-and-assess’ policy environment rather than an aggressive shift in monetary conditions. For investors, this reinforces the value of diversification, careful asset selection and close monitoring of interest rates, inflation and the exchange rate as the economic outlook evolves.
takeaway
Uganda’s August 2026 monetary policy stance remains cautious: the CBR is held at 9.75% as the economy strengthens but inflation risks remain. With growth projected at 7.0%–7.5% in FY2026/27, opportunities remain, but investors should keep an eye on fuel prices, food inflation, global conditions and the exchange rate.
Disclaimer: This newsletter is for information purposes only and does not constitute investment advice. Past performance does not guarantee future results
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