Botswana central bank cuts interest rate again by 25 basis points
Botswana's central bank reduces its key lending rate by 25 basis points to 1.90% for the second consecutive meeting due to an economy operating below capacity. The move aims to stimulate economic growth, as inflation has increased to 3.7% in July but remains within the target range. The bank forecasts inflation to average 3.0% in 2024, down from the previous estimate of 3.6%.
By Brian Benza
GABORONE, Aug 22 (Reuters) - Botswana’s central bank lowered its key lending rate for the second meeting in a row on Thursday, saying there was scope to ease monetary policy as the economy continued to operate below capacity.
Bank of Botswana lowered its Monetary Policy Rate (BWRATE=ECI) by a further 25 basis points to 1.90% after reducing it by 25 bps in June.
In a news conference explaining the decision, central bank Governor Cornelius Dekop reiterated his previous comments that Botswana’s economy was forecast to operate below capacity in the medium term, failing to generate demand-driven inflationary pressures.
“As a result, the prevailing economic conditions and outlook provide scope for easing of monetary policy,” Dekop added. “Our aim is that this will assist in stimulating economic growth.”
The southern African country’s consumer inflation quickened to 3.7% year on year in July from 2.8% in June (BWCPIY=ECI) , but stayed within the Bank of Botswana’s 3% to 6% medium-term target range.
Inflation is expected to average 3.0% in 2024, Dekop said, down from 3.6% the bank forecast at its June meeting.
