GABORONE, Oct. 30 — The Bank of Botswana’s Monetary Policy Committee on Thursday decided to increase the monetary policy rate from 1.9 percent to 3.5 percent.
“The policy decision is intended to reinforce policy transmission, particularly in relation to the monetary operations tools and distribution of market liquidity,” Cornelius Dekop, governor of the central bank, said at a press briefing in Gaborone, the capital of Botswana.
However, commercial banks are directed not to increase their Prime Lending Rates in response, according to the press release.
The central bank noted that the policy decision also aims to complement the adjustment of exchange rate parameters in July, which was intended to preserve the official foreign exchange reserves, as well as signal the intent to support the external balance.
Botswana’s real gross domestic product contracted by 3 percent in the 12 months to June this year, a sharper decline compared to the 0.6 percent contraction in the year to June 2024.
The weak performance was mainly due to the downturn in mining output and generally subdued non-mining activity, according to the statement.
Data from Statistics Botswana suggested that headline inflation averaged 2.1 percent in the third quarter of 2025, lower than the 3.1 percent in the same period last year. Headline inflation increased significantly from 1.4 percent in August to 3.7 percent in September.
The Committee forecasts inflation to increase in the medium term from an average of 2.7 percent in 2025 to 5.9 percent in 2026, said the press (Xinhua)
