Botswana’s Central Bank Keeps Benchmark Rate Unchanged at 6.00%

Gaborone, Botswana, Capital Markets in Africa — Bank of Botswana maintains the Bank Rate at 6 percent at the Monetary Policy Committee  (MPC) meeting held on the 9 December 2015, according to a press release by the bank.

In 2015, the MPC had cut the Bank Rate in February and August by 100 basis points (from 7.50 percent) and 50 basis points (from 6.50 percent) respectively. However, maintained the Bank Rate of 6 percent and 6.50 percent in October and June MPC’s meeting. 

The MPC’s decision is to align with the need to safeguard financial stability, the bank affirmed. As a result, credit growth is considered to be at a sustainable level and it is posing no threat to financial stability. 

In addition, GDP growth is estimated at 4.2 percent in the twelve months to June 2015, compared to 6.1 percent in the corresponding period in 2014, thus reflecting the slower expansion of 1.3 percent for the mining sector. Non-mining output growth was 4.8 percent for the same period, the press release noted. However, the bank identified sluggish global economic outlook and the resultant weakening commodity prices as likelihood downside risks for the Botswana’s economy.

Furthermore, Bank of Botswana quoted inflation was 3.1 percent in October 2015, marginally higher than 2.9 percent in September. But the MPC opined that low domestic demand pressures and subdued foreign price developments contribute to the positive inflation outlook in the medium term, with a caveat that the inflation outlook could, however, be adversely affected by any unanticipated large increase in administered prices and government levies as well as international oil and food prices beyond current forecasts.