The inflation outlook is favourable, with inflation projected to stabilize around the 5.0 per cent target in the medium term. Given the current inflation outlook, BoU has kept the policy rate on hold since October 2018. Low inflation protects the purchasing power of Ugandans, especially for the poor households.
BoU has successfully ensured financial sector stability, including through resolving commercial banks that posed systemic risks by being very highly interconnected, both by the number and size of transactions with the other commencial banks. Currently, commercial banks are wellcapitalized, liquid, and profitable. Improvements in asset quality have contributed to an easing of lending standards and credit recovery.