- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 3.5%
The Monetary Policy Committee of the Bank of Botswana left the Monetary Policy Rate (MoPR) unchanged at 3.5 percent, judging that inflation remains within the 3–6 percent objective and that subdued, below-potential growth justifies a broadly accommodative stance. Following a 160-basis-point increase in October 2025, the MoPR has been steady at this level. Monetary operations continue to be conducted at the policy rate, with the 7-day Bank of Botswana Certificates, repos and reverse repos aligned to 3.5 percent, and the standing deposit and credit facility rates held at 2.5 percent and 4.5 percent respectively; the directive barring banks from raising prime lending rates is maintained. Headline inflation inched up to 4.1 percent in January 2026 (3.9 percent in December 2025) and is forecast to average 4.5 percent in 2026 and 4.7 percent in 2027, with upside risks from the proposed April electricity tariff hike, higher transport fares, livestock disease impacts, reduced VAT zero-rating and potentially firmer global commodity prices, partly offset by softer demand conditions. Real GDP expanded by only 0.1 percent in the year to September 2025, and the Ministry of Finance expects a 0.4 percent contraction for 2025 before a 3.1 percent recovery in 2026, as non-mining sectors gain traction amid ongoing fiscal consolidation and diversification efforts. The central bank reports that earlier policy adjustments have improved liquidity and supported the foreign-exchange market, while global growth is projected to remain modest at 3.3 percent in 2026 against a backdrop of trade frictions and geopolitical tensions. The committee pledged continued vigilance and readiness to adjust policies to safeguard 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.