- Decision
- Raise
- Rate change
- 160 bps
- monetary policy rate
- 3.5%
The Bank of Botswana’s Monetary Policy Committee lifted the Monetary Policy Rate (MoPR) by 160 bp to 3.5 % at its 30 October 2025 meeting, framing the move as a “recalibration” aimed at improving monetary-policy transmission, easing liquidity distribution and bolstering July’s exchange-rate adjustment that helped stabilise foreign-exchange reserves, rather than as conventional tightening, and instructed commercial banks to keep prime lending rates unchanged. After holding the MoPR at 1.9 % since August 2024, including at the August 2025 meeting, the committee has now ended a prolonged pause. All 7-day Bank of Botswana Certificates, repos and reverse repos will be priced at the new MoPR, repo maturities are extended to up to three months, the Standing Deposit Facility is set at 2.5 %, the Standing Credit Facility at 4.5 %, and the Credit Facility trimmed to 6.5 % to discourage liquidity hoarding. Headline inflation averaged 2.1 % in Q3 and jumped from 1.4 % in August to 3.7 % in September, with the MPC projecting a rise from 2.7 % in 2025 to 5.9 % in 2026 and judging risks “tilted to the upside” owing to higher utility tariffs, fuel costs and global commodity prices, even as GDP fell 3 % y/y to June 2025 and the Ministry of Finance sees a 0.4 % contraction for 2025. Foreign-exchange reserves have steadied at about six months of import cover, interbank FX turnover has risen to roughly BWP3 bn a month, and the Bank’s FX sales have dropped to BWP2.8 bn. Against a backdrop of subdued global growth, geopolitical tensions and a weak diamond market that has eroded fiscal and external buffers, the committee signalled it will keep policy broadly accommodative while watching inflation and financial-stability conditions closely.
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.