30 Apr 2020

Bank of Botswana Monetary Policy Committee has reduced the bank rate by 50 basis points from 4.75 per cent to 4.25 per cent.

Addressing a press conference via Skype on April 30, the governor of the bank, Mr Moses Pelaelo said the Primary Reserve Requirement had also been reduced to 2.5 per cent from five per cent while the inflation remained unchanged for the fourth consecutive month at 2.2 per cent in March, remaining below the lower bound of the bank’s desired medium-term objective range of 3-6 per cent. 

Mr Pelaelo said the inflation was forecast to revert to within objective range in the fourth quarter of 2020, which represents a significant downward revision compared to forecasts contained in the February 2020 Monetary Policy Statement.

The governor said the decision was taken based on the impacts of the COVID-19 pandemic and a consequent containment measures, which has severely curtailed economic activity domestically and globally as the production, supply chains, project implementation and provision of goods and services are halted.

He said similarly, consumption and spending were disrupted, hence domestic demand pressures and foreign prices remained subdued and consequently an overall risk to inflation outlook were skewed to the downside, taking into account weak domestic and global economic activity and likely decrease in international commodity prices.

Mr Pelaelo, however, said inflation may rise above current forecasts if international commodity prices increase beyond current projections and in the event of upward price pressures occasioned by supply constraints due to travel restrictions and the lockdown. Ends