The Bank of Botswana (BoB) has announced that it will keep its Monetary Policy Rate (MoPR) “unchanged” at 1.90%, marking the sixth consecutive meeting without an adjustment.
According to statements from the apex bank on Thursday, the comes as the central bank navigates a difficult balancing act: a struggling domestic economy paired with persistent upside risks to the “inflation outlook”.
The central bank’s Monetary Policy Committee (MPC) noted that despite a period of relatively low inflation, which has remained below the bank’s medium-term objective range of 3–6%, the risks for future price increases remain elevated.
Influence in decisions
The diamond rich South African nation’s domestic economy has been facing a downturn, with several key sectors experiencing contractions; largely attributed to a weak global diamond market, which has had a significant negative impact on one of Botswana’s primary revenue sources.
The International Monetary Fund (IMF) and other organizations have revised their 2025 growth forecasts for the country, with some predicting a contraction of around 0.4%.
* Inflationary Pressures: While headline inflation has been low, the central bank sees potential for it to rise. The MPC is wary of global factors, such as volatile commodity prices and lingering supply chain issues, which could push up domestic costs. The Bank has also noted that its own forecasts show inflation moving back within its target range in the medium term.
* Monetary Policy Stance: The Bank of Botswana has maintained an accommodative monetary policy since August 2024, aiming to support the struggling economy. In addition to the low MoPR, the central bank has implemented other measures, such as a zero percent Primary Reserve Requirement and an increase in the repo tenure with commercial banks to improve short-term liquidity.
The decision to hold the rate steady signals the BoB’s commitment to maintaining price stability while simultaneously attempting to provide support for a domestic economy that continues to grapple with external and internal challenges. The central bank’s next Monetary Policy Committee meeting is scheduled for October 2025.
