The Monetary Policy Committee (MPC) of Bank of Botswana has decided to maintain the bank rate at 5 percent, the governor of the central bank, Moses Pelaelo, said Tuesday.
Addressing journalists at the bank’s boarding room in the capital Gaborone Pelaelo said that the outlook for price stability remains positive as inflation is forecast to be within the 3-6 percent objective range in the medium term.
“Inflation decreased marginally from 3.4 percent in April to 3.3 percent in May 2018, and was within the objective range,” said Pelaelo.
Pelaelo further stated that current state of the economy and the outlook for both domestic and external economic activity suggest that the prevailing monetary policy stance is consistent with maintaining inflation within the objective range in the medium term.
Real GDP in Botswana grew by 2.4 percent in 2017 compared to the faster growth of 4.3 percent in 2016. The bank says the slower growth reflects a lower increase of 4.2 percent in non-mining activity, compared to 5.5 percent in the previous year. Botswana’s mining output contracted significantly by 11.2 percent in 2017 compared to a decline of 3.5 percent in 2016.
Meanwhile the country’s GDP is projected to expand at a faster rate in the short-to-medium term, driven largely by growth in the services sectors and recovery in mining activity, in line with the positive global economic prospects.
“Overall, the economy is expected to operate close to, but below full capacity in the medium term,” said the governor.
