Bank of Botswana holds interest rate at 5.5 percent
Inflation cooled to 7.8 percent in September, but remains above the central bank's target range.
The Bank of Botswana kept its main interest rate at 5.5 percent on Wednesday, deciding against a change even as inflation eased. The Monetary Policy Committee, led by Governor Lesego C. Moseki, voted unanimously to maintain the rate. This decision aims to balance controlling inflation with supporting a fragile economic recovery.
Consumer price inflation fell to 7.8 percent in September from 9.3 percent the previous month. However, much of this decrease was due to a statistical base effect from a fuel price increase in September 2025. Underlying inflation remains above the Bank's 3-to-6 percent comfort zone, with rising fuel and electricity costs expected to keep it elevated.
Policymakers now forecast inflation to average 8.1 percent for 2026, falling to 5.4 percent in 2027, with a return to the target band anticipated in the second quarter of next year. Risks to this outlook include potential increases in fuel and electricity prices, drought affecting food costs, and global oil price volatility due to the Middle East conflict.
Why it mattersThe Bank of Botswana's decision to maintain interest rates affects borrowing costs for businesses and consumers, impacting economic activity.