Bloomberg News

Uganda’s Central Bank to Start Targeting Inflation of 7%

June 23, 2011

(Updates inflation target in first paragraph, comments starting in third.)

June 23 (Bloomberg) -- Uganda’s central bank said it will introduce inflation targeting in the fiscal year through June 2012, aiming for annual price growth of 7 percent in the first three years of the program.

The bank will set the seven-day repo rate each month to influence inflation, rather than targeting money supply through the amount of Treasury bills and bonds it sells, Deputy Governor Louis Kasekende said at a workshop in the capital, Kampala, today.

“We are making a shift from using quantities to inflation targeting,” he said.

The policy may be introduced as early as July, Elliot Mwebya, the bank’s spokesman, said in an interview, while Adam Mugume, the director of research at the bank, said the inflation target would be 7 percent. Inflation accelerated to 16 percent in May, the fastest pace in 17 years. Repurchase operations would start next month, Mugume said.

The East African nation, which has a population of 31.9 million people and a $16.6 billion economy, is the second- biggest coffee grower in Africa after Ethiopia.

--Editors: Philip Sanders, Alastair Reed

To contact the reporter on this story: Fred Ojambo in Kampala at fojambo@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.


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