The Monetary Policy Committee of the Bank of Botswana on Wednesday met and decided to maintain its bank rate at 6 percent.
A communiqu├® from the bank states that the decision was taken in view of the positive outlook for price stability, with inflation forecast to be within the Bank’s 3 ÔÇô 6 percent medium term objective range.
“The current state of the economy and both the domestic and external economic outlook, including the inflation forecast, suggest that the prevailing monetary policy stance is consistent with maintaining inflation within the Bank’s medium-term objective range of 3 – 6 percent. In the circumstances, the Monetary Policy Committee decided to maintain the Bank Rate at 6 percent.” BoB said in a statement late Wednesday.
Before the Wednesday meeting, the bank had noted in its 2015 annual report that the monetary policy was conducted in the context of a positive medium throughout the year due to modest domestic demand, reasonable upward adjustment in administered prices and in order to support economic growth.
Still in 2015, the Bank Rate was reduced by a cumulative 1.5 percentage points from 7.5 percent to 6 percent during the year.
“The conduct of monetary policy also took into consideration the need to maintain financial stability.”
Meanwhile the bank said Wednesday that the low domestic demand pressures and subdued foreign price developments contribute to the positive inflation outlook in the medium term.
“This outlook is subject to downside risks emanating from sluggish global economic activity and the resultant low commodity prices. It could, however, be adversely affected by any unanticipated large increase in administered prices and government levies as well as in international oil and food prices beyond current forecasts”, BoB said this week.