- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 1.9%
The Monetary Policy Committee of the Bank of Botswana on 19 June 2025 left the Monetary Policy Rate (MoPR) unchanged at 1.9 percent, judging that recessionary conditions—real GDP fell 3 percent in 2024 and the Ministry of Finance now sees 2025 output contracting by 0.4 percent—and subdued demand will keep inflation within the 3–6 percent objective range, after headline inflation eased to 1.9 percent in May and is forecast to average 2.7 percent in 2025 and 4.6 percent in 2026 with balanced risks. The MoPR has been steady at 1.9 percent since August 2024, a stance reaffirmed at the Committee’s February and April 2025 meetings. To tackle persisting structural liquidity constraints that have pushed wholesale deposit and prime lending rates higher, the central bank lengthened repo maturities from up to seven days to as long as one month while keeping 7-day BoBC auctions, repos and reverse repos at the policy rate; the Standing Deposit and Credit Facility rates remain at 0.9 percent and 2.9 percent respectively, preserving the ±100 bp corridor. Earlier steps to ease funding pressures—abolishing the 2.5 percent primary reserve requirement, widening foreign-exchange trading margins and lifting banks’ FX trading limits to USD5 million—will be supplemented by potential further increases in FX limits, new prudential rules to broaden banks’ funding bases and measures to encourage onshore retention of foreign-currency holdings. The Committee noted that global trade frictions and the escalating Israel-Iran conflict have rekindled oil-price risks, but reiterated that it will continue to monitor economic and market developments and act as needed to maintain price and financial stability.
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.