Saturday, December 2, 2023

Central Bank sings praise over its Monetary Policy

Botswana’s central bank says it is satisfied with its accommodative monetary policy it has been running over the last decade.

On Monday, Bank of Botswana decided to maintain the bank rate at 5 percent- the last bank cut rate was last year October, from 5.5 percent to the current rate. The central bank has not hiked rates since 2008, instead the bank has been cutting rates from the highs of 15.5 percent in 2008 to the lowest current levels of 5 percent.

Dr. Tshokologo Kganetsano, Bank of Botswana’s head of Research and Financial stability, admitted on Monday that they remain satisfied with their monetary policy stance, explaining that through their policy tools, they have arrested inflation within the bank’s objective range of 3 ÔÇô 6 percent.

Inflation ÔÇô which measures the rise in prices ÔÇô has also been on a downward trajectory since 2008, finally falling within bank of Botswana’s desired objective range in 2016. Besides inflation targeting, Dr. Kganetsano said their loose monetary policy has stimulated economy as evidenced by credit growth, particularly in the business sector, signaling business confidence.

“The bank rate cuts are actually working. On a year-on-year, credit grew by 7.2 percent while on year to date, it is up 4.4 percent compared to 2.1 percent growth in a similar period last year. ” he said.

In response to whether the bank rate cuts have bottomed out since the bank has been maintaining the same rate for a year now, he said it has not, hinting that there is room for further cuts. “There is no specific figure where we can say confidently that at this point we are done. The monetary policy is influenced by economic realities. So should circumstances change, the bank will act accordingly,’ Dr. Kganetsano said.


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