The near-term prospects for the economy remained broadly unchanged since the last rate decision, with growth driven by a recovery in the service sector, Bank of Uganda Deputy Governor Michael Atingi-Ego told a news conference.

"The current monetary policy stance will ... contribute to keeping inflation around its medium-term target, supporting economic stability to encourage savings, investment, economic growth, competitiveness and social economic transformation," Atingi-Ego said.

In August the bank cut the lending rate by 50 basis points after year-on-year inflation dropped below its medium-term target of 5%.

Uganda's economy has performed better than many of its African peers in an environment of tightening global financial conditions, helped by favourable weather and improved agricultural production.

The deputy governor said economic output in the second quarter this year was 5.2%, higher than 0.4% in the preceding quarter, driven by strong activity in services and industrial sectors.

"Economic growth is projected to remain strong in the coming months... boosted by investments in the extractive industries, financed by foreign direct investments and higher export earnings," he said.

International oil firms France's TotalEnergies and China's CNOOC are making significant investments in oilfield infrastructure and an oil export pipeline, as the country prepares to start pumping crude in 2025.

(Reporting by Elias Biryabarema; Writing by George Obulutsa; Editing by Alexander Winning, Alexandra Hudson)