At the meeting held last Monday, the Bank of Botswana Monetary Policy Committee decided to increase the Bank Rate by half a percentage point (50 basis points) to 15 percent.
The last adjustment of the Bank Rate was a decrease of the same magnitude of 50 basis points on June 18, 2007.
Since October 2007, inflation has trended upwards and has remained above the bank's objective range of 3 - 6 percent, mainly reflecting the global increase in the price of food and oil. It is now expected that inflation will maintain an upward trajectory in the short- term, up to the fourth quarter of the year, before declining to around 9 percent in the first quarter of 2009. The
In the circumstances, the bank is taking a proactive stance by tightening the monetary policy with the objective of containing second-round effects and inflation expectations in order to sustain a low medium-term inflation path. The bank remains committed to responding appropriately to all economic and financial developments to keep inflation under control without undermining sustainable economic growth.