The Bank of Botswana's monetary policy committee (MPC) has announced that it will keep the monetary policy rate (MoPR) at 2.65% as inflation rose from 1.2% in August to 3.2% in September.
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% for October. The MPC projects that, going forward, inflation will remain within the objective range into the medium term.
Additionally, real gross domestic product (GDP) grew by 5% in the twelve months to June 2023, compared to a growth of 6.7% in the year to June 2022. The slowdown is mainly due to lower growth in mining production.
"The MPC recognises that the economy is expected to operate below full capacity in the short term and, thus not generate demand-driven inflationary pressures. Furthermore, inflation is forecast to be within the objective range in the medium term. Therefore, the MPC decided to maintain the MoPR at 2.65%," the bank said.
The last MPC of the year will be held on December 7.