Botswana’s central bank retains policy rate

17 Feb 2016
Chibuike Oguh


The Bank of Botswana said it retained its Bank Rate at 6 percent as inflation poses no threat to price stability.

Linah Mohohlo, Governor, Bank of Botswana

The Bank of Botswana (BoB) has left its benchmark interest rates unchanged, as the country’s inflation rate looks set to remain stable in the near term.

In a statement released after its Monetary Policy Committee meeting on Wednesday, the BoB said it retained its Bank Rate at 6 percent as inflation poses no threat to price stability.

“The inflation forecast suggest that the prevailing monetary policy stance is consistent with maintaining inflation within the Bank’s medium-term objective range of 3 - 6 percent,” the BoB said.

In January, Statistics Botswana reported that the Consumer Price Index (CPI) dropped to 2.7 percent from 3.1 percent recorded in December 2015, and lower than the 3.6 percent recorded in January 2015.

Statistics Botswana attributed the slowing pace of the inflation rate between January 2015 and January 2016 to the “decline in prices of commodities in the main component of Transport.”

“Low domestic demand pressures and subdued foreign price developments contribute to the positive inflation outlook in the medium term,” The BoB said.

“This outlook . . . could, however, be adversely affected by any unanticipated large increase in administered prices and government levies as well as international oil and food prices beyond current forecasts.”

Botswana exports mostly diamonds (constituting over 60 percent of total exports), copper and nickel, beef and textiles. Botswana's main export partners are United Kingdom (accounting for 56 percent of total exports), South Africa, Israel, and Belgium, according to Trading Economics, a ratings and data firm.

According to the BoB, Botswana’s economy grew by 1.2 percent in the 12 months to September 2015, compared with 4.1 percent in the corresponding period in 2014. The slowdown in GDP growth reflected the contraction in mining production, which declined by 11.8 percent in 2015. However, non-mining output rose 3.7 percent in 2015.

Botswana has one of highest GNI per capita in Africa at $16,030 (2014). The southern African country also has one of the highest ratings in Africa at A minus by US-based ratings agency, A.M. Best.

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