At the meeting held on August 29, 2019, the Monetary Policy Committee (MPC) of the Bank of Botswana decided to reduce the Bank Rate by 25 basis points from 5 percent to 4.75 percent. Inflation increased from 2.8 percent in June 2019 to 2.9 percent in July, and was below but closer to the lower bound of the Bank’s objective range of 3 – 6 percent. Nonetheless, inflation is forecast to revert within the Bank’s 3 – 6 percent objective range in the first quarter of 2020.
Subdued domestic demand pressures and the modest increase in foreign prices contribute to the positive inflation outlook in the medium term. This outlook is subject to upside risks emanating from the potential rise in administered prices and government levies and/or taxes, beyond current forecasts. However, modest growth in global economic activity, technological progress and productivity improvement present downside risks to the outlook.