Could interest rates be raised for the first time in 14 years? :: Mmegi Online

Expectations that inflation will rise above 10% in the next few months, could see the Bank of Botswana increasing interest rates for the first time in more than 10 years, a move that would make loan repayments more expensive. Staff Writer, MBONGENI MGUNI reports

Local asset management firm, African Alliance, believes interest rates could rise by as much as 100 basis points this year, the equivalent of one percentage point, a major jump particularly given that the central bank has been lowering interest rates gradually since as far back as 2008.

“Our house view is for 50bps to 100bps in rate increases this year and this is informed by the BoB’s December Monetary Policy Report where the bank indicated that it expects inflation to average 10.4% in the first quarter of 2022, which will likely force the bank’s hand,” says Nlume Modise, chief investment officer at African Alliance Asset Management.

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