KAMPALA, Feb 6 (Reuters) – Uganda’s central bank held its key lending rate UGCBIR=ECI at 10.0% on Monday, saying it expected inflation would slow to hit its target by the end of the year despite a pick-up in January that it thought would be short-lived.

The decision, announced by deputy governor Michael Atingi-Ego at a news conference, was the second time in a row the bank has kept its policy rate unchanged.

Last year it raised rates by 350 basis points to fight inflation.

Inflation was 10.4% year-on-year in January UGCPIY=ECI from 10.2% a month earlier, but Atingi-Ego said core inflation was expected to decline to the 5% target by the end of 2023.

Risks to the inflation outlook include the potential impact of international financial conditions on the Ugandan shilling UGX= exchange rate, and higher food and energy prices, he added.

“The current CBR (Central Bank Rate) would contain domestic demand pressures, while accommodating and supporting economic recovery,” Atingi-Ego said.

(Reporting by Elias Biryabarema; Writing by George Obulutsa; Editing by Alexander Winning and Andrew Heavens)