(Adds analyst comment, currency)
By Elias Biryabarema
KAMPALA Oct 18 Uganda's central bank cut its
main interest rate on Tuesday to 13 percent from 14
percent to boost growth, and analysts said there was room for
another reduction this year.
Policymakers in the East African nation began cutting the
benchmark rate in April, bringing it back down from the peak of
17 percent reached as the bank battled a surge in prices.
Core inflation dipped to 4.8 percent last month from 5
percent in August, while the economy expanded by 4.8 percent in
the financial year that ended in June, up from an earlier
estimate of 4.6 percent, bank governor Emmanuel
The economy is expected to grow 5.0 percent this fiscal
year, he said, while core inflation will remain around the
medium-term target of 5 percent in the next 12 months.
"There is room to support domestic economic growth momentum
especially against the ongoing global economic slowdown," he
told a news conference.
The growth rate has been tepid in recent years, hurt by the
commodity price slump, and conflict in regional export markets
like South Sudan.
This month, the World Bank cut its 2016/17 growth forecast
for the country to 5.5 percent from a previous projection of 5.9
percent, citing slowing investments and the impact of South
Sudan's conflict on demand for its exports.
Razia Khan, Standard Chartered Bank's chief economist for
Africa, said she expected another cut at the next rate-setting
meeting in December.
"We expect a further 100 bps (basis points) of easing at the
December 2016 meeting, after which the policy rate is likely to
be kept on hold for an extended period," she said.
There was no immediate reaction to the cut by the shilling
and traders said they expected it to remain stable.
(Editing by Hugh Lawson)