Monetary Policy Stance and Actions in August 2010

In the domestic economy, low and stable inflation and overall macroeconomic stability remained the key objectives of monetary policy in August 2010. The Bank o Uganda continued to manage liquidity awith a view of supporting aggregate demand while at the same time mindful of the price stability objective. The steralization of structural (long term) liquidity was effected through sales of government securities and repurchase agreements (REPO) were used to fune tune short-term liquidity conditions. (for the full report read the Monthly Economic and Financial Indicators for August 2010, published on this website)

MONETARY POLICY IN UGANDA Section 162(c) of the Constitution of the Republic of Uganda (1995) provides that: "The Bank of Uganda shall encourage and promote economic development and the effective utilization of the resources of Uganda through effective and efficient operations of the banking and credit system". The Bank of Uganda Act, CAP 51 (Laws of Uganda, 2005) states in Section 5(i) the function of the Bank "shall be to formulate and implement monetary policy directed to economic objectives of achieving and maintaining economic stability The objective of Monetary Policy is ensure low and stable inflation and competitive exchange rates. This is implemented through the Monetary and Credit Policy Committee (MCPC) which is chaired by the Governor and meets on weekly basis.

Composition of MCPC
MCPC is chaired by the Governor. Other members are: Deputy Governor, Executive DirectorOperations, Executive Director-Research, Executive Director - Supervision, Executive Director General Duties, Economic Advisor to Governor, Director Financial Markets, Director Communications, Director Statistics, and Director - Research, who is the Secretary.

Roles and Responsibilities of MCPC

To formulate and direct the conduct of monetary policy in order to deliver price stability and support Governments objectives for sustainable economic growth To direct the conduct of financial markets operations

To ensure that liquidity conditions in the money markets are consistent with the broad objectives of price stability> To review developments in the foreign exchange market and formulate policies to promote stability in the market To seek harmonization and coordination of Government fiscal policies with monetary policies to support macroeconomic stability To address any other issue that has implications for the stability of the macro economy, including appraising policy recommendations from Functions, Government Departments and other forums.

Implementation
The Financial markets Operations Subcommittee (FMOSC) meets daily to implement monetary policy actions in accordance with the policies, guidelines and decisions made by the Monetary and Credit Policy Committee (MCPC). FMOSC is chaired by the Deputy Governor, with the Executive Director - Operations as the alternate chair and Director Financial Markets as Secretary. Other members are: Executive Director - Research, Executive Director - Supervision, Director Commercial Banking, Director Research, Director Communications, and Director Financial Stability.