25 Feb 2024

The Monetary Policy Committee (MPC) has maintained the Monetary Policy Rate at 2.4 per cent as the central bank expects inflation to remain within its inflationary objective of 3-6 per cent.

Speaking at the launch of the MPC Report on Thursday, Bank of Botswana Governor Mr Cornelius Dekop said inflation rate increased from 3.5 to 3.9 per cent between December 2023 and January, remaining within the objective.

The increase has been attributed to the diminishing impact of decrease in domestic fuel prices.

Mr Dekop said inflation was expected to remain at 3.9 per cent in February.

However, he said inflation could be higher than projected if international commodity prices increase beyond current forecasts, supply and logistical constraints persist and the reversal of global economic integration.

“Furthermore, inflation may be heightened by possible upward adjustment in prices controlled by government (administered prices) that is not factored in the current projection and any increase in domestic food prices due to the projected El Nino conditions in Southern Africa,” he said.

The governor said inflation could also be lower than anticipated because of the possibility of weaker domestic and global economic activity, as well as any decrease in international commodity prices.

Meanwhile, the economy measured through GDP is estimated to have grown by 3.2 per cent in 2023, compared with 5.5 per cent in 2022.

The slowdown has been mainly attributed to subdued mining activity.

Overall, inflation is expected to average 4 per cent this year and 5 per cent next year due to the recently announced stimulus budget which is expected to increase demand. ENDS