Effectiveness of Monetary Policy in Controlling Inflation under Supply Shocks: Bank of Uganda's Central Bank Rate and Food and Fuel Price Pressures

Food and fuel shocks create a difficult monetary policy problem: higher interest rates can restrain spending and inflation propagation but cannot directly replace lost agricultural output or reduce international oil prices. This article examines the effectiveness of Bank of Uganda's Central Bank Rate (CBR) through a structured documentary review and descriptive secondary-data analysis. The principal retrospective episode is October 2022-October 2023, supplemented by a separately identified September–October 2026 policy snapshot. Sources comprise official Ugandan inflation and policy publications, International Monetary Fund assessments, and research on monetary transmission and commodity shocks. Headline inflation fell from 10.7% to 2.4% during the retrospective episode, an 8.3 percentage-point reduction, while the consumer price index increased from 126.13 to 129.20. These observations establish disinflation without establishing a monetary policy treatment effect. Published evidence supports a functioning but uneven transmission mechanism, alongside a substantial role for supply normalization. The CBR is therefore assessed as useful for containing generalized inflation and supporting credibility, with limited direct leverage over the originating food and fuel shortages. Effectiveness depends on shock persistence, exchangerate conditions, credit transmission, expectations and complementary fiscal and supply measures. The article recommends forecast-based decisions, clearer reporting of inflation propagation, targeted household support, and investments that reduce food and energy vulnerability. No new household survey, causal regression or model-derived effectiveness percentage is claimed.