Wrong move to raise interest rates - Mohohlo

The inflation rate, driven mainly by rising food and energy costs, will probably drop to the upper end of the 3 percent to 6 percent target next year, Mohohlo said in an interview in Washington yesterday. The Bank of Botswana has left its benchmark interest rate unchanged at 14.5 percent since June even as inflation climbed to 9 percent in February, the highest in 17 months. The central bank in February lowered the inflation target range from 4 percent to 7 percent, aiming to keep it within the band over the next three years, rather than on an annual basis.

"It will be a wrong move to raise interest rates to begin with, unless inflation proves that it's gone beyond the limits we have forecast,'' Mohohlo said. Monetary policy was still "restrictive enough to curb price pressures," she said.