Bank of Uganda lowers interest rate amid Covid-19 pandemic

Uganda’s central bank, the Bank of Uganda (BoU), has lowered its policy interest rate from 9% to 8%, in an attempt to mitigate any major economic fallout from the coronavirus pandemic.

Globally, economists appear to accept the inevitability of a worldwide recession in the coming months due to a lack of economic activity brought on by Covid-19.

The BoU has dropped the policy interest rate in an effort to reduce borrowing costs, cut banking fees, boost consumer demand and restore confidence as the country looks forward.

The BoU released a statement earlier explaining their concerns for the state of the economy.

“The Covid-19 pandemic has led to a severe contraction in economic activity due to a combination of supply disruptions, travel restrictions, measures to limit contact between persons, and the sudden decline in demand.

“Consumer-facing sectors have been severely affected by social distancing measures and heightened uncertainty, while the manufacturing sector has declined on account of disruptions to the inflow of raw materials”.

Uganda’s projected growth forecasts have now been cut from 6.5% down to between 3-4% for this year, which was to be expected.

Photo: NMG/File