BoB Holds Monetary Policy Rate Steady at 2.65% as Inflation Eases

  • Inflation fell from 9.9% in March to 7.9% in April
  • Projected to remain within BoB’s range of 3-6% into medium term




The Monetary Policy Committee (MPC) of the Bank of Botswana (BoB) announced its decision to maintain the Monetary Policy Rate (MoPR) at 2.65 percent.


Made after its most recent meeting, the announcement comes as inflation showed signs of easing, albeit remaining above BoB’s medium-term target range of 3-6 percent.


“Inflation fell from 9.9 percent in March 2023 to 7.9 percent in April 2023, but remained above the Bank’s medium-term objective range of 3 – 6 percent,” says the MPC in a statement released by BoB.

Dissipating impact

“The decrease in inflation was mainly due to the dissipating impact of the earlier increases in administered prices (base effects) in the corresponding period in 2022.


“Inflation is forecast at 5.7 percent in May 2023 and the MPC projects that going forward, inflation will remain within the objective range into the medium term.”


According to the statement, the projected decline in inflation can be attributed to various factors, including the absence of upward adjustments in administered prices, subdued domestic demand, anticipated appreciation of the Pula against the South African Rand, and the zero rating of select items from value-added tax.

Int’l commodity prices

“Inflation could be higher than projected in the event international commodity prices were to increase beyond current forecasts, persistence of supply and logistical constraints, as well as reversal of global economic integration (geo-economic fragmentation),” it says.


The MPC highlights that the risks associated with higher inflation are balanced by the possibility of weak domestic and global economic activity, potential disinflationary effects resulting from higher monetary policy rates worldwide, a stronger-than-expected appreciation of the Pula against the South African rand, and restrained international commodity prices.

“According to the April 2023 World Economic Outlook report, global output growth for 2022 is estimated at 3.4 percent and forecast to moderate to 2.8 percent in 2023 and 3 percent in 2024,” says the statement.


“South African real gross domestic product (GDP) grew by 1.9 percent in 2022. The South African Reserve Bank expects growth to weaken to 0.3 percent in 2023 but to improve to 1 percent in 2024.

4% to 5.1% GDP growth

“For Botswana, real GDP increased by 5.8 percent in 2022, lower than 11.9 percent recorded in 2021. The Ministry of Finance projects GDP to grow by 4 and 5.1 percent in 2023 and 2024, respectively.”


The MPC acknowledges the ongoing implementation of growth-enhancing economic transformation reforms and supportive macroeconomic policies in Botswana.


“These include accommodative monetary conditions, improvement in water and electricity supply, implementation of the two-year Transitional National Development Plan and reforms to further improve the business environment,” it notes.


“Against this background, enhanced productivity, innovation, and the resultant international competitiveness of domestic firms could contribute to maintenance of domestic inflation within the objective range.”

Monetary policy rate unchanged

Considering the dissipating impact of administered prices and the expectation that the economy will operate below full capacity in the short-term without generating demand-driven inflationary pressures, the MPC maintains its projection that inflation will remain within the objective range in the medium term. Consequently, the MPC maintained and kept the monetary policy rate unchanged at 2.65 percent.


MPC comprises BoB senior staff and advisers and has responsibility for guiding monetary policy within the framework and objectives set out in the annual Monetary Policy Statement.


This, among others, involves setting the policy rate (the Bank Rate) but may include reviewing other instruments of monetary policy.