KAMPALA, April 3 (Reuters) - Uganda's central bank on Wednesday held its key lending rate at 12 percent for the fourth consecutive month as it treads a path between curbing inflation and supporting economic growth it says may reach 6 to 7 percent this year.
The central bank opted for a neutral policy stance as the medium-term inflation forecast was still in line with its 5 percent target, and a recovery of real output was gaining momentum, bank Governor Emmanuel Tumusiime-Mutebile said.
'There are signs of increased buoyancy in the economy,' Tumusiime-Mutebile told a news conference.
'I'm impressed with the recent forecasts ... clearly we're recovering from the problems of 2011/12 and if the rate of this economic growth continues then 2012/13 will probably be in the range of 6-7 percent.'
The bank's previous forecast for growth this year was 4.3 percent
'Preliminary quarterly GDP data ... for the first half of 2012/13 indicate that real growth accelerated in that period, driven by strong growth in the services, construction and manufacturing sectors.
'It is possible that the negative output gap that characterised the economy in 2011/12 has narrowed significantly.'
Year-on-year headline inflation in East Africa's third biggest economy rose to 4.0 percent in March from a revised 3.5 percent the previous month.
Although the overall has been low in recent months, underlying inflation has been above target since February, leading to the cautious stance by policymakers in holding steady the Central Bank Rate (CBR).
During March core inflation also rose to 6.8 percent from a revised 5.6 percent in February, due to an increase in the prices of foodstuff as well as maize flour that was occasioned by low supplies.
(Reporting by Elias Biryabarema; writing by James Macharia; editing by Stephen Nisbet) Keywords: UGANDA RATES/
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