Commercial Bank interest rates have risen to 20 per cent in quarter ended August from 18.9 per cent in May.
The increase, according to Bank of Uganda, was due to the risk associated with some sectors such as agriculture, personal and household applicants, which dominate requests for shilling denominated loans.
However, during the period, the Central Bank noted, interest rates for foreign currency denominated loans declined marginally to 5.6 per cent in the quarter to August 2020 from 5.7 per cent in May.
The increase comes at a time when the Bank of Uganda has maintained the Central Bank Rate, which is a key determinant in the movement of commercial bank interest rate at 7 per cent for about three months now.
The Central Bank had in July threatened to cap interest rates, noting that commercial banks had failed to respond to movements in the Central Bank Rate.
Bank of Uganda also said private sector credit, which is a key indicator of growth, had declined during the period to August, reflecting concerns about the unstable economic environment weakened by Covid-19.
Private sector credit slowed to 7.5 per cent in the period to August compared to 10 per cent in May.
Shilling-denominated loans grew by an average of 9.5 per cent compared to 13.6 per cent in the May 2020 while foreign currency-denominated loans grew by 3.6 per cent in the three months to August compared to 3 per cent in May.
During the period, money in circulation grew by 21.4 per cent in compared to 20.7 per cent in the quarter to May.
Shilling deposits grew (average) by 23.7 per cent compared to 20 per cent while while growth in forex deposits slowed by 16.5 per cent compared to 22.4 per cent.
The Central Bank also noted that the shilling had remained stable due to subdued demand from telecom, energy and manufacturing sectors, which had been matched by supply from offshores, non-governmental organisations, remittances, forex bureau and coffee export receipts.
During the period to August, the shilling per depreciated slightly by 0.5 per cent against the dollar stabilis ing at an average mid-rate of Shs3,695.1 against the dollar.