Uganda, March 26 -- The Bank of Uganda recently increased its benchmark lending rate by 50bps to 10.0 percent in an attempt to tackle rising inflation. The Deputy Governor is to be commended for his clarity and forthrightness. He soberly remarked: "overall, risks to growth are tilted to the downside".

To their credit, the special Monetary Policy Committee (MPC) met quickly and acted decisively.

The decision to raise rates came in response to two interconnected economic realities: imported commodity price increases (out of Uganda's control) and excess supply of (and potentially lower demand for) the Ugandan shilling as holders sell their shillings and seek to invest internationally or keep their funds in foreign currencies. The imported ...