The Bank of Botswana’s Monetary Policy Committee maintained the Monetary Policy Rate at 3.5 percent and retained its broadly accommodative stance to support economic activity. It also kept the Standing Deposit Facility rate at 2.5 percent, the Standing Credit Facility rate at 4.5 percent and the directive preventing commercial banks from increasing their Prime Lending Rates. Seven-day Bank of Botswana Certificates auctions, repos and reverse repos will continue to be conducted at the policy rate. Inflation rose to 3.9 percent in October 2025 but remained within the 3 percent to 6 percent objective range. The bank expects inflation to average 2.7 percent in 2025 and 5.3 percent in 2026, with a temporary breach of the range’s upper bound before inflation returns within target over the medium term. Risks are tilted upward because of higher utility tariffs, domestic fuel prices, global tariffs and potential commodity and logistics pressures, although weak demand is expected to limit demand-driven inflation. Botswana’s economy is projected to contract by 0.5 percent in 2025 amid continued diamond-sector weakness before expanding by 3.1 percent in 2026. The expected recovery rests on stronger diamond demand, expanded non-diamond mining and electricity production, and economic transformation reforms.
2025-12-04Bank of Botswana
Bank of Botswana holds policy rate at 3.5 percent and maintains prime lending rate restriction
The Bank of Botswana held its policy rate at 3.5 percent and maintained the restriction on commercial banks increasing their Prime Lending Rates. Inflation is expected to average 5.3 percent in 2026 and temporarily exceed the 3 percent to 6 percent objective range, but weak economic activity should limit demand-driven price pressures. The economy is projected to contract by 0.5 percent in 2025 before growing by 3.1 percent in 2026.