Bank of Botswana Maintains Rate at 1.9% for Fifth Consecutive Sitting

The Bank of Botswana's Monetary Policy Committee (MPC) has decided to maintain the Monetary Policy Rate (MoPR) at 1.9% for the fifth consecutive meeting. 

Headline inflation reduced from 2.3% in April 2025 to 1.9% in May 2025, remaining below the lower bound of the bank's medium-term objective range of 3 – 6%. 

The MPC forecasts inflation to remain low into the medium term, averaging 2.7% in 2025 and 4.6% in 2026.

According to the apex bank, the domestic economy faces challenges relating to inadequate traction of transformation policy initiatives, thus a lack of economic diversification and weakening fiscal and external position. Credit rating agencies Moody's and S&P Global have also downgraded Botswana's economic outlook from "stable" to "negative" as a result of current struggles.

Meanwhile, in terms of economic performance, a growth rate of 2.9% is expected in 2026, albeit an optimistic figure anchored on the recovery of the diamond industry.

"As previously observed, the economy is expected to operate below full capacity in the short term, though improving slightly into the medium term. This should not generate demand-driven inflationary pressures. Thus, inflation is forecast to remain within the objective range in the medium term. Similarly, businesses expect inflation to be within the medium-term objective range, suggesting that inflation expectations are well anchored. "

The decisions come at a time when commercial banks in the country are hiking up rates in response to a liquidity squeeze, which the governor acknowledged at the recent rate announcement.

The MPC's next meeting will be on 21 August 2025.