05 Dec 2018

Bank of Botswana (BoB) has maintained the bank rate at five per cent.

Addressing members of the media on December 4, BoB governor, Mr Moses Pelaelo said the monetary policy committee took the decision at a meeting held this week. He said the outlook for price stability remained positive as inflation was forecast to remain within the bank’s 3-6 per cent objective range in the medium term.

He said inflation increased from 2.9 per cent in September to 3.6 per cent in October and was expected to go up slightly in the short term mainly driven by the increase in domestic fuel prices.  He said subdued domestic demand and modest increase in foreign prices contributed to the positive inflation outlook in the medium-term. However, he said the outlook was subject to upside risks emanating from the potential rise in administered prices in domestic fuel prices and government levies and taxes beyond current forecasts.

Mr Pelaelo added that restrained growth in global economic activity, technological progress and productivity improvement, along with modest wage growth, presented downside risks to the outlook.  He said real GDP grew by 4.4 per cent in the 12 months to June 2018 compared to 3.2 per cent in the year to June 2017.

He said improvement in performance reflected recovery in the mining sector which grew by 5.6 per cent compared to a contraction of 10 per cent in the previous year. He said growth in non-mining GDP moderated to 4.3 per cent in the year to June 2018, from 5 per cent in 2017. He added that GDP growth was projected to improve in the short to medium term.

He stated that the economy would operate close to, but below full capacity in the medium-term, thus posing no upside risk to the inflation outlook.ENDS