29 Oct 2023

Bank of Botswana Monetary Policy Committee (MPC) has maintained the Monetary Policy Rate (MoPR) at 2.65 per cent.

This was revealed by new Bank of Botswana governor, Mr Cornelius Dekop at a media briefing in Gaborone on October 26.

Mr Dekop also revealed that headline inflation increased from 1.2 per cent in August to 3.2 per cent in September, reverting within the bank’s medium-term objective range of three to six per cent.

He attributed the inflation increase to the upward adjustment in domestic fuel prices on September 13, which increased inflation by 1.31 per cent.

Mr Dekop added that inflation was focused at 3.4 per cent during October and the MPC had projected that it would remain within the objective range into the medium term, going forward.

“The MPC observes that inflation could be higher than anticipated or projected if international commodity prices increase beyond current focus, supply and logistical constraints persist and the reversal of global economic integration escalates,” he said.

Again, the Governor said possible upward adjustment in prices controlled by government such as electricity and water tariffs that was not factored in the current projection may lead to higher inflation.

“However, inflation could be lower than anticipated because of the possibility of weaker domestic and global economic activity, possible disinflationary effects of higher monetary policy rates globally and any decrease in international commodity prices,” he added.

Furthermore, he said real Gross Domestic Product (GDP) grew by five per cent in the 12 months to June this year, compared to a growth of 6.7 per cent in the year to June 2022, the slowdown, which he said, was mainly due to lower growth in mining production.

On one hand, he indicated that according to this month’s world economic outlook, global output growth was 3.5 per cent last year and was forecast to moderate to three per cent and 2.9 per cent this year and next year, respectively.

For Botswana, he said GDP growth was projected to moderate to 3.8 per cent this year and recover to 4.4 per cent next year, from an increase of 5.8 per cent last year.

“The MPC notes the growth-enhancing economic transformation reforms and supportive macro-economic policies being implemented.

These include supportive monetary and fiscal policies, improvement in water and electricity supply, implementation of the Economic Recovery and Transformation Plan and the two-year Transitional National Development Plan, as well as reforms to further improve the business environment, for example, promulgation of the Credit Information Act and Movable Property Act both of which, have the potential to make credit more accessible,” he said.

Also, he said the committee had recognised that the economy was expected to operate below full capacity in the short term and thus not generate demand-driven inflationary pressures.

“Likewise, inflation was forecasted to be within the objective range in the medium term,” he said.

Mr Dekop said the seven-day Bank of Botswana certificates auctions, repos and reverse repos would be conducted at the MoPR of 2.65 per cent and the Standing Deposit Facility (SDF) rate was maintained at 1.65 per cent, 100 basis points below the MoPR.

He also said the Standing Credit Facility (SCF) rate remained at 3.65 per cent, 100 basis points above the MoPR.

Meanwhile, Mr Dekop told the media that the last MPC meeting for this year would be held on December . Ends