This study analyzes Uganda’s economic shift from a liquidity trap to reduced liquidity using ARIMA (1, 1, 1) model. Time-series data from 1983 to 2022 reveals periods of negative real interest rates, indicating liquidity traps in 1983-1993 and 2009. Parameter estimates confirm model robustness, with AR(1) statistically significant at 59%. Forecasts predict rising real interest rates from 32.7% in 2023 to 84.1% in 2042, signaling reduced liquidity and economic challenges. The study recommends policy interventions to stabilize liquidity, support investment, and sustain economic growth.