The Monetary Policy Committee (MPC) of the Bank of Botswana in a press release has announced its decision to maintain the Monetary Policy Rate (MoPR) at 2.65 percent.
This decision comes as Headline inflation in Botswana increased from 1.2 percent in August to 3.2 percent in September 2023, returning to the Bank’s medium-term objective range of 3-6 percent.
“The Monetary Policy Committee (MPC) of the Bank of Botswana maintained the Monetary Policy Rate(MoPR) at 2.65 percent.
Headline inflation increased from 1.2 percent in August to 3.2 percent in September 2023, reverting to within the Bank’s medium-term objective range of 3 – 6 percent.
The increase in inflation was mainly due to the upward adjustment in domestic fuel prices on September 13, 2023, which increased inflation by 1.31 percentage points.
Inflation is forecast at 3.4 percent for October 2023. The MPC projects that, going forward, inflation will remain within the objective range into the medium term.
According to the MPC, this increase is primarily attributed to the upward adjustment in domestic fuel prices in September, which boosted inflation by 1.31 percentage points.
The MPC added that it is cautiously monitoring factors that could impact inflation in the coming months, stating, “Inflation could be higher than projected if international commodity prices rise beyond forecasts, supply and logistical constraints persist, and global economic integration reverses.”
However, they also note that inflation could be lower than expected due to the possibility of weaker domestic and global economic activity and disinflationary effects of higher monetary policy rates worldwide. With a focus on maintaining stable inflation, the MPC’s decision aims to keep the economy on a steady course.
The Monetary Policy Report (MPR) is set to be released on November 2, 2023, offering a more in-depth analysis of the economic landscape.
Despite a slight slowdown in economic growth, Botswana according to the statement remains on a positive trajectory. Real gross domestic product (GDP) saw a growth rate of 5 percent in the twelve months to June 2023, compared to 6.7 percent in the previous year.
This deceleration is largely attributed to reduced growth in mining production, which is a key sector of Botswana’s economy.
Globally, the World Economic Outlook for October 2023 predicts a moderation in output growth, with Botswana’s GDP expected to stabilize at 3.8 percent in 2023, rebounding to 4.4 percent in 2024 after a 5.8 percent increase in 2022.
The MPC acknowledged that the government has implemented growth-enhancing economic transformation reforms and supportive macroeconomic policies, which include improvements in water and electricity supply, the implementation of the Economic Recovery and Transformation Plan, and various reforms aimed at enhancing the business environment.
Despite these measures, the MPC noted that the economy is expected to operate below full capacity in the short term, making it less susceptible to demand-driven inflationary pressures.
With the expectation that inflation will remain within the objective range in the medium term, the MPC’s decision to maintain the MoPR at 2.65 percent reflects its commitment to stability and sustainable economic growth.
Upcoming Monetary Policy Committee Meeting and Publication of Monetary Policy Report
The Monetary Policy Committee (MPC) has scheduled its last meeting of the year for December 7, 2023, following its recent decision to maintain the Monetary Policy Rate (MoPR) at 2.65 percent.
To provide a comprehensive overview of economic and policy developments, the Monetary Policy Report (MPR) will be published on the Bank of Botswana’s website on November 2, 2023.
This report will offer insights into the Bank’s outlook and analysis of economic conditions, serving as a valuable resource for businesses and policymakers alike as they navigate the evolving economic landscape.
