Ugandan shilling steady after benign inflation data

KAMPALA: The Ugandan shilling held steady against the dollar on Friday after inflation slowed in May, pointing to an even monetary policy path ahead, market participants said.

At 1023 GMT, commercial banks quoted the currency at 2,555/2,565 per dollar, unchanged from Thursday's close.

"Core inflation, which matters most as far as the monetary policy is concerned, has remained largely unchanged, and that is noteworthy," Bank of Africa trader Ahmed Kalule said. "I don't think Bank of Uganda will cut its rate, since non-food prices haven't changed a lot.

I would expect the tone for the shilling to be stable." The headline inflation rate dropped to 5.4 percent in May, from last month's 6.7 percent, driven by a slow rise in food prices, the statistics office said on Friday.

Core inflation, which the central bank targets, inched down to 3.3 percent from 3.4 percent in April.

The central bank has maintained its policy rate at 11.5 percent for the past five months. Its monetary policy committee will set rates for the coming month on June 4.