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No interest rate cuts soon despite inflation drop

Monday, June 26, 2023 | 260 Views |

Making decisions: The central bank is responsible for monetary policy management PIC: MORERI SEJAKGOMO

The Bank of Botswana (BoB) does not envisage cutting interest rates anytime soon, despite projections of cooling inflation, with executives arguing that numerous threats to the forecasts persist.

The central bank raised interest rates three times last year, by a collective 151 basis points as it fought escalating inflation which peaked at 14-year highs in August. However, since then, inflation has been falling – largely due to lower fuel prices and base effects – and in May, dropped to a two-year low at 5.7 percent.

The BoB last week said it expects inflation to remain within the three to six percent objective range going into the medium term. The central bank had previously expected inflation to revert on a sustained basis to the objective range from the second quarter of 2024.

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