IMF Staff Country Reports

Uganda : Technical Assistance Report-Monetary and Foreign Exchange Operations, Recapitalization, and Act Revision

Author/Editor:

International Monetary Fund. Monetary and Capital Markets Department

Publication Date:

January 16, 2018

Electronic Access:

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Summary:

The BOU has been successful in guiding core inflation close to target in recent years in line with its Inflation Targeting Lite (ITL) monetary framework adopted in mid-2011. The experience since then demonstrates that the BOU has been committed to maintain Uganda’s floating exchange rate regime and to conduct monetary operations aiming at firmly anchoring inflation expectations by using the seven-day REPO to steer the seven-day interbank rate as close as possible to the central bank policy rate (CBR). Despite ensuring low inflation, the presence of sizable precautionary and involuntary reserves and excessive short-end volatility has weakened the transmission mechanism. The key challenge remains to enhance monetary and fiscal policy coordination and to ensure that institutional and operational arrangements are robust and conducive to efficient monetary operations framework.

Series:

Country Report No. 18/10

Subject:

Central bank legislation Foreign exchange operations Inflation targeting Monetary operations Technical Assistance Uganda