The Bank of Uganda introduced an inflation targeting lite monetary policy framework in July 2011 at the core of which is a policy interest rate-the central bank rate (CBR). The CBR is intended to guide the setting of other interest rates in the economy and determined primarily on the basis of the Bank of Uganda’s forecast of future annual core inflation.
Over the past 36 months, the CBR has been set at the beginning of each month by the monetary policy committee of the Bank of Uganda with the interest rate decision announced at a press briefing after the monetary policy committee meeting. Since the inflation targeting lite framework was introduced in July 2011, financial market participants and other economic agents have begun to incorporate the CBR into their economic decision making processes.
In order to strengthen further the monetary policy framework, especially the macroeconomic analysis which underlies the setting of CBR, the regular meeting of the MONETARY POLICY COMMITTEE (MPC) and the press briefing to announce the interest rate decision which follows the MPC, will now be held bi-monthly, effective from the start of the new fiscal year 2014/2015. The MPC will be held in the middle of the month on the 10th working day of the month, to allow more time for incorporating economic data from the previous month into the analysis which informs the interest rate decision. The next MPC will be held in August according to the governor bank of Uganda, Tumusiime Mutebile.
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