Bank of Uganda Cuts Benchmark Lending Rate to 6.5%

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The Bank of Uganda (BoU) has reduced the benchmark lending rate by 0.5 basis points to 6.5% due to contraction in private sector investment heightened by coronavirus induced uncertainties.

The benchmark lending rate also known as central bank rate is the interest rate BoU charges financial institutions when they borrow money. The benchmark rate is also set to stabilize the economy.

“The monetary policy committee (MPC) assessed that the risks to the economic growth outlook are still on the downside, that there remains considerable excess capacity in the economy, sectoral unevenness of economic recovery, and a weak level of business investment,” BoU governor Emmanuel Tumusiime Mutebile said in a statement.

“Therefore, the economic recovery continues to require monetary policy support until economic slack is absorbed so that the 5 percent inflation target is sustainably achieved.”

President Yoweri Museveni on June 6, 2021 ordered the closure of schools and the suspension of non-essential travel between districts in an attempt to stem out a worrying trend in the rise in Covid-19 cases.

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Schools were to close beginning June 7, 2021 for six weeks and mass gatherings are banned, with an exception for weddings and funerals that are only allowed with a limited number of people.

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