Bank of Uganda reduces key lending rate to 9 percent, the lowest the country has had

Bank of Uganda has lowered the country's benchmark lending rate also known as the Central Bank Rate (CBR) for the month of February from 9.5 percent to 9 percent, in an effort to spur credit growth in the economy.

9 Percent is the lowest Central Bank Rate the country has had in the last 5 years.

In 2011, the key lending rate rose to 23 percent, as Bank of Uganda struggled to contain runaway away inflation that reached over 30 percent.

As inflation started to slow, the Central Bank also began trimming its key rate, up to the 9percent we have got 6 years later.

Bank of Uganda Governor Emmanuel Tumusiime Mutebile argues that the economy has the capacity to withhold inflationary pressures.

This means the country can withstand the runaway price increases that come with the increased demand, access to cash or increased liquidity brings with it.

Speaking at the Central Bank's monthly press briefing, Mutebile said the cost of credit remains relatively high for micro and small loans while the cost of credit/loans has reduced for corporates.

Mutebile also projected that economic growth for 2017/18 will be in the range of 5.5 % which is a positive pay off for the current monitory policy, while over the next 5years, economic growth is projected to reach 6.3 % boosted by increased government spending.

Economic growth for 2016 was 2.5%.

This means that economic growth will double in 2017/2018.