UPDATE 1-Uganda slashes key lending rate, sees smaller cuts in future

(Adds details, background)

KAMPALA, Oct 2 (Reuters) - Uganda's central bank cut its key lending rate for the fifth straight month on Tuesday to 13.0 percent from 15.0 percent previously, but expects smaller cuts if any for the rest of the year, the bank's governor said.

Governor Emmanuel Tumusiime-Mutebile told a news conference that there were upside risks for inflation to rise due to domestic supply shocks.

"The main upside risks to the inflation forecasts are domestic supply shocks, particularly to food production, higher global commodity prices and exchange rate depreciation as a result of the external current account," he said.

Tumusiime-Mutebile said that any further cuts to the key lending rate in 2012 were likely to be small unless there was a major drop in inflation and aggregate demand, but this was unlikely in the short term.

"The sharp drop in the annual inflation rates of 6-7 percent points that occurred in September will not be repeated in the near term, because it was mainly caused by the so called "base effects," he said.

(Reporting by Elias Biryabarema; Writing by George Obulutsa; Editing by James Macharia)

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Keywords: UGANDA RATE/