Uganda opened a busy week of African monetary policy by holding its benchmark rate at 9.75%, extending a six-meeting pause as inflation stays well below target.
- •The Bank of Uganda (BoU) said price pressures remain contained even as economic growth holds above 6%, keeping policy in a cautious but supportive stance.
- •Four other central banks across Africa now face key decisions that could signal the start of a broader easing cycle.
- •The Monetary Policy Committee (MPC) left the Central Bank Rate unchanged on Feb. 9, concluding that current settings are sufficient to anchor inflation while sustaining activity.
Officials cited prudent monetary policy, coordination with fiscal authorities, a stable shilling, and softer global food and energy prices.
Headline inflation averaged 3.5% over the past year and was 3.2% in January, up from 3.1% in December. Core inflation rose to 3.3%, driven mainly by services, particularly passenger air transport. Food crop inflation cooled to 3.0% from 4.4%, while energy, fuel and utilities inflation edged up to 1.7%.
BoU now expects inflation to average 3.8%–4.3% in 2026, below its 5% target, before converging toward target over the medium term. Policymakers warned that risks remain elevated, including fiscal-driven demand pressures, exchange-rate volatility, geopolitical shocks, and adverse weather.
Uganda’s economy grew 6.3% on average in the first three quarters of 2025, led by consumption, especially government spending. The central bank projects growth of 6.5%–7.0% in FY2025/26 and around 8% over the medium term, supported by public investment, oil developments, and infrastructure projects. With policy unchanged, the rediscount rate stays at 12.75% and the bank rate at 13.75%, both set above the 9.75% CBR within a ±2 percentage point band.
Uganda’s hold sets the tone for February across Africa:
- •On Feb. 10, Zambia meets after cutting its key rate by 25 basis points to 14.25% in November 2025, its first reduction since August 2020. Markets expect a further cut to 13.75%.
- •Kenya’s MPC convenes the same day. In December, the Central Bank of Kenya cut by 25 basis points to 9.0%, its ninth consecutive reduction. Governor Kamau Thugge said the move aimed to spur bank lending, support activity, and keep inflation expectations anchored while preserving exchange-rate stability. A February cut to 8.75% would extend the streak.
- •Mauritius follows on Feb. 11. The Bank of Mauritius held its repo rate at 4.5% in November for a third straight meeting, citing the need to anchor medium-term inflation. October inflation was 4.1%, within its 2–5% target range.
- •Egypt meets on Feb. 12. In December, the Central Bank of Egypt cut rates by 100 basis points, its first major easing since early 2024. Another cut to 19% would signal that December marked the start of a broader easing cycle.
- •On Feb. 18, Namibia is likely to hold at 6.50% after holding in December following an October cut, balancing growth needs with the NAD–ZAR peg. Rwanda meets Feb. 23 after holding at 6.75% in November to keep inflation within its 2–8% band.
- •Nigeria decides Feb. 24. The CBN held at 27% in November after a September cut, with inflation easing to 16.05% in October but still high. Botswana closes the month on Feb. 26 after holding at 3.5% in December following a 160-bps hike in October, with inflation at 3.9% and growth still weak.
February will show whether African central banks move decisively toward easing or keep a cautious stance.
