Bank of Uganda Delivers Emergency 225 Basis Point Rate Hike to 12%
The Bank of Uganda delivered a major interest rate increase at an emergency meeting on Oct. 14, 2026, lifting its benchmark rate by 225 basis points to 12%. The sudden move ended a prolonged pause in policy tightening and raised domestic borrowing costs to levels not seen since 2017.
Central bank leaders acted to stabilize the Ugandan shilling, which has declined around 12% against the U.S. dollar this year after hitting consecutive record lows. Governor Michael Atingi-Ego noted that persistent currency weakness risks driving up domestic inflation, prompting the need for stricter monetary conditions. Heavy foreign exchange demand from oil importers coping with elevated global energy prices has placed continuous pressure on the national currency.
Investors will monitor how the aggressive rate increase affects currency stability alongside policy constraints. Prior to the rate change, Ugandan President Yoweri Museveni instructed the central bank to stop selling foreign exchange reserves to support the currency, leaving interest rate increases as the primary tool to contain local currency losses.
Key points
- The Bank of Uganda raised its main interest rate by 225 basis points to 12% during an unscheduled meeting on Oct. 14, 2026.
- Borrowing costs reached their highest mark since 2017 following an extended pause in policy tightening.
- The policy adjustment aims to defend the Ugandan shilling, which has fallen roughly 12% against the U.S. dollar in 2026.
- Governor Michael Atingi-Ego warned that ongoing currency depreciation threatens to trigger higher inflation.
- President Yoweri Museveni previously directed the central bank to refrain from selling U.S. dollars in FX markets.
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How we writeDisclaimerQuestions and answers
Why did the Bank of Uganda raise interest rates to 12%?
The central bank raised rates at an emergency meeting to halt a sharp drop in the Ugandan shilling and prevent rising inflation triggered by high import costs.
How much has the Ugandan shilling fallen in 2026?
The currency has lost approximately 12% against the U.S. dollar this year, reaching consecutive record lows driven by foreign currency demand from energy importers.
What did President Museveni order regarding foreign exchange sales?
Ugandan President Yoweri Museveni instructed the central bank not to sell U.S. dollars from reserves to defend the currency.