UPDATE 1-IMF cuts Uganda's fiscal 2015/16 GDP growth forecast to 5 pct

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KAMPALA, Nov 19 (Reuters) - The International Monetary Fund (IMF) revised Uganda’s growth forecast for the 2015/16 (July-June) fiscal year to 5 percent from the 5.8 percent it predicted in May, the fund said in a statement.

GDP growth is at 5 percent “and is expected to remain at that level ... reflecting tight credit conditions and a smaller-than-expected fiscal stimulus”, it said late on Wednesday.

The Bank of Uganda (BoU) has aggressively ramped up its benchmark interest rate this year in response to price pressures fuelled by a weak local currency and surging food costs.

Since April, BoU has raised the Central Bank Rate (CBR) by a total of 600 basis points to 17 percent.

The IMF said “inflation expectations and pressures in the foreign exchange market are subsiding” as a result.

Year-on-year headline inflation rose to 8.8 percent from 7.2 percent in September although core inflation, BoU’s target, slowed to 6.3 percent from 6.7 percent over the same period.

The shilling has been broadly firmer since early October but it still down 17.5 percent against the dollar this year. (Additional reporting by George Obulutsa; Editing by Edith Honan and Louise Ireland)