Botswana Adjusts Interest Rate Downwards, Citing Stable Inflation Outlook

Botswana’s central bank has decided to reduce its primary interest rate by 25 basis points to 2.40%, emphasizing its confidence in maintaining a stable inflation environment within the target range.

As of October, inflation in the southern African nation saw a marginal decline to 3.1% from the previous month’s 3.2%, comfortably aligning with the Bank of Botswana’s preferred inflation band of 3% to 6%.

During a news conference, Governor Cornelius Dekop stated, “The MPC (Monetary Policy Committee) projects the economy to operate below capacity in the medium term and thus not generate any inflationary pressures.”

The Monetary Policy Rate, which is based on a 7-day instrument, had remained at 2.65% since August 2022.

Key Points:

• Botswana’s central bank sees an opportunity to ease monetary policy, supported by the expectation that inflation will remain within the target range.
• The country’s inflation rate stood at 3.1% in October, a slight decrease from the previous month, indicating a stable economic environment.
• Governor Dekop highlighted that the economy is projected to operate below capacity in the medium term, reducing the likelihood of inflationary pressures.
• The adjustment brings the Monetary Policy Rate down from 2.65% since August 2022, signaling a strategic move to stimulate economic activity.

This decision reflects Botswana’s commitment to maintaining economic stability and fostering an environment conducive to sustainable growth.