- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 1.9%
The Monetary Policy Committee of the Bank of Botswana on 20 February 2025 left the Monetary Policy Rate (MoPR) unchanged at 1.9 percent, judging that recession-hit domestic demand and a benign inflation outlook warrant continued accommodation. To implement the stance, 7-day Bank of Botswana Certificate, repo and reverse-repo operations will be conducted at 1.9 percent, with the Standing Deposit Facility and Standing Credit Facility held at 0.9 percent and 2.9 percent respectively, while the primary reserve requirement remains at zero. Headline inflation accelerated to 2.5 percent y/y in January from 1.7 percent in December but stayed below the 3–6 percent objective band; it is projected to average 3.9 percent in 2025 and 5 percent in 2026, with risks described as balanced. Real GDP contracted for a third consecutive quarter, shrinking 4.3 percent y/y in Q3 2024 after declines of 5.2 percent and 0.4 percent in Q1 and Q2, as weak global diamond demand hit exports and constrained fiscal spending; the 2025 Budget forecasts a 3.3 percent rebound that would still leave output below potential. The Committee noted softer domestic activity, declining export earnings and heightened global uncertainty linked to geoeconomic fragmentation and tariffs, but expects inflation to remain within target over the medium term, reinforcing its decision to keep policy settings steady.
Rate evolution
The Bank of Botswana unanimously maintained the Monetary Policy Rate at 5.5 percent on 27 August 2026. Headline inflation fell from 10.7 percent in June to 9.4 percent in July but remained above the 3–6 percent medium-term objective range, and the Bank projected it would stay above range through the first quarter of 2027, mainly because of supply-side pressures including fuel prices, higher electricity tariffs and related cost-push effects. Risks remained tilted to the upside, reflecting potential second-round effects, livestock restrictions, a possible El Niño and external commodity and trade pressures.
Growth remained subdued amid adverse external developments, despite marginal real gross domestic product growth of 0.2 percent in the twelve months to March 2026. The Bank judged that measures implemented to date had eased liquidity conditions, improved monetary policy transmission and supported foreign exchange market stability, warranting a data-driven stance that supports economic activity while managing inflation expectations.