- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.5%
The Bank of Botswana’s Monetary Policy Committee unanimously held the Monetary Policy Rate at 5.5%, balancing above-target inflation against subdued growth, following transmission-focused recalibrations of 160 basis points to 3.5% in October 2025 and 200 basis points in April 2026. It retained its standing deposit and credit facility rates and will continue certificate auctions, repos and reverse repos at the policy rate. The committee also lifted the moratorium on commercial banks’ prime lending rates, expecting improved liquidity and moderating funding costs to support lower lending rates. Headline inflation fell to 7.8% in September 2026, mainly reflecting fuel-price base effects, but remained above the 3–6% medium-term objective range. Inflation is expected to return within that range in the second quarter of 2027, although risks remain tilted upward from fuel and electricity costs, potential second-round effects and climate shocks. Real output grew 3.7% in the twelve months to June 2026, supported by mining, but overall economic performance remained weak. Domestic liquidity improved, moderating funding costs, while the committee said earlier policy measures had supported foreign-exchange market stability. Globally, the Middle East conflict, elevated commodity prices and trade uncertainty threaten to sustain inflation pressures and undermine the diamond-market recovery. The central bank signalled a data-driven stance supporting economic activity while managing inflation expectations and safeguarding price and financial-system 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.
On 29 October 2026, the Bank again unanimously held the policy rate at 5.5 percent, judging that growth remained subdued despite real gross domestic product growth of 3.7 percent in the twelve months to June 2026. Headline inflation declined from 9.3 percent in August to 7.8 percent in September, mainly because of fuel-price base effects, but the Bank expected higher fuel and electricity costs to keep inflation above the objective range before it returned to range in the second quarter of 2027. The Bank judged that earlier measures had eased liquidity conditions, improved monetary policy transmission and supported foreign exchange market stability, warranting a continued data-driven stance that supported economic activity while managing inflation expectations.