Botswana’s central bank kept its main interest rate (BWRATE=ECI) unchanged at 2.65% on Thursday, saying that a fall in inflation to below its target range was likely to be temporary.
Annual inflation fell sharply in July to 1.5% (BWCPIY=ECI), from 4.6% in June.
The Bank of Botswana’s objective inflation range is 3%-6% in the medium term.
“Inflation is forecast at 1.2% for August 2023 and the Monetary Policy Committee projects that inflation will remain below the lower bound of the objective range temporarily and revert to within the objective range from the first quarter of 2024 into the medium term,” Governor Moses Pelaelo told a news conference.
Last year the Bank of Botswana switched to an interest rate based on a seven-day instrument instead of an annual rate.
Its Monetary Policy Rate has been at 2.65% since August 2022.
Reporting by Brian Benza Writing by Nellie Peyton Editing by Alexander Winning