The Bank of Botswana has kept its Monetary Policy Rate at 5.5 percent, opting against further tightening despite inflation remaining well above the central bank’s target range.
The decision was taken by the Monetary Policy Committee (MPC) on Thursday as inflation fell from 10.7 percent in June to 9.4 percent in July. The rate remains significantly above the Bank’s 3-6 percent medium-term objective.
Bank Governor, Lesego Mosekio said that the reserve bank expects inflation to remain above target until at least the first quarter of 2027, with fuel prices, higher electricity tariffs and related cost pressures identified as the main risks.
For businesses and consumers, the decision means borrowing costs are unlikely to ease quickly. The Bank also maintained the moratorium on commercial banks’ prime lending rates, while keeping the Standing Deposit Facility at 4.5 percent and the Standing Credit Facility at 6.5 percent.
The central bank’s decision comes against a weak domestic economic backdrop. Real GDP grew by just 0.2 percent in the year to March 2026, although the contraction in mining slowed and some non-mining sectors, including manufacturing and agriculture, recovered.
The Ministry of Finance is forecasting stronger growth of 3.1 percent for 2026, supported by an expected recovery in mining and continued expansion in non-mining sectors. The MPC, however, flagged risks ranging from geopolitical tensions and changing trade patterns to livestock disease and climate shocks.
The inflation forecast has been revised down, with the Bank now projecting an average of 7.9 percent for 2026 and 4.9 percent in 2027. The lower forecast is largely attributed to the reduction in domestic fuel prices. The next MPC meetings are scheduled for October 29 and December 3.