The Bank of Botswana's Monetary Policy Committee (MPC) has resolved to keep the Monetary Policy Rate (MoPR) at 1.9% for the fourth consecutive sitting. This is as the bank continues to attempt to drive economy recovery severely impacted by an extensive slump in diamond sales.
Headline inflation increased from 2.7% in February 2025 to 2.8% in March 2025, but still remaining below the lower bound of the bank's medium-term objective range of 3 – 6%.
The increase in inflation was mainly due to increases in food and motor vehicle prices. The MPC forecasts inflation to remain low into the medium term, averaging 2.5% in 2025 and 4.9% in 2026.
According to the apex bank, the domestic economy faces challenges relating to inadequate traction of transformation policy initiatives, thus lack of economic diversification and weakening fiscal and external position. Credit rating agencies Moody's and S&P Global have also downgraded Botswana's economic outlook from "stable" to "negative" as a result of current struggles.
"Indeed, the challenges faced now and those ahead require effective design and implementation of sound policies and achievement of high levels of productivity across all our initiatives and efforts to grow the economy," the MPC said.
"Notwithstanding, the MPC deliberations and decisions continue to be undertaken within the Bank’s monetary policy framework as recently outlined in the 2025 Monetary Policy Statement. "
"As previously observed, the economy is expected to operate below full capacity in the short term, though improving slightly into the medium term. This should not generate demand-driven inflationary pressures. Thus, inflation is forecast to remain within the objective range in the medium term. Similarly, businesses expect inflation to be within the medium-term objective range, suggesting that inflation expectations are well anchored. "
The MPC's next meeting will on 19 June 2025.