By: ThinkBusiness Africa
The Bank of Botswana’s Monetary Policy Committee (MPC) announced Thursday its decision to maintain the Monetary Policy Rate (MoPR) at 3.5%. This marks the second consecutive meeting where the rate has remained unchanged, as the central bank balances a slight uptick in inflation against a domestic economy still reeling from a prolonged slump in the global diamond market.
Despite recent pressures, Botswana’s headline inflation has remained within the central bank’s medium-term objective range of 3% to 6%.
Inflation rose to 4.1% in January 2026, up from 3.9% in December.
The recent increase was largely attributed to rising costs in food, non-alcoholic beverages, and health services. The Bank expects inflation to average 4.5% in 2026, staying well-anchored within the target corridor.
Governor Lesego Moseki, delivering the 2026 Monetary Policy Statement, noted that while the policy remains “broadly accommodative” to support growth, several “upside risks” to inflation persist.
An outbreak of Foot-and-Mouth Disease in January 2026 has led to livestock movement restrictions, which may spike meat and food prices.
Proposed changes in the 2026/27 Budget, including a reduction in VAT zero-rated items, could add upward pressure to consumer prices.
The economy continues to face significant strain due to low demand for diamonds, the nation’s primary export, which led to an estimated economic contraction of 0.4% in 2025.
The 3.5% rate was established in October 2025 following a strategic 160-basis-point hike intended to improve liquidity management and align domestic rates with market conditions rather than strictly as a tightening measure.
The MPC concluded that with the economy operating below full capacity, demand-driven inflationary pressures remain subdued. This allows the bank to maintain current rates to foster a “stable and favorable environment for sustainable growth.”
