Botswana’s central bank retains rate at 65, inflation falls to 2.7% …

Gaborone, Botswana, Capital Markets in Africa — Bank of Botswana retains the Bank Rate at 6.0 percent at the meeting of the Monetary Policy Committee (MPC) held on Wednesday, 17 February 2016, Bank of Botswana said in a statement on its website.

The Bank’s decision is aligned with the need to safeguard financial stability, to sustain credit growth and to maintain financial stability.  

In addition, Botswana’s GDP growth is estimated at 1.2 percent in the twelve months to September 2015 compared to the revised 4.1 percent in the corresponding period in 2014, thus reflecting the contraction of 11.8 percent in mining production but the non-mining output increased by 3.7 percent, the MPC stated.

On the inflation front, headline inflation fell to 2.7 percent in January from 3.1 percent in December.  Inflation fell for several commodity groups. The trimmed mean measure of core inflation and inflation excluding administered prices fell from 3.2 to 2.8 percent and 4.5 to 4.0 percent, respectively.

At the same time, the MPC’s concluded that the outlook for price stability remains positive, with the forecast pointing to inflation staying within the 3 – 6 percent objective range in the medium-term. This is attributed to low domestic demand pressures and subdued foreign price developments.

However, the Bank of Botswana noted that, the outlook is subject to downside risks arising from sluggish global economic activity and the resultant weakening commodity prices as well as  any unanticipated large increase in administered prices and government levies plus any deviation beyond current forecasts.