Botswana Bank leaves key rates at 9.5 pct
Botswana’s central bank on Tuesday left its bank rate unchanged at 9.5 percent, saying short-term price developments implied it would take longer than earlier seen for inflation to fall into the target range.
In a statement, the Bank of Botswana said non-mining gross domestic product was expected to remain below trend in the medium term, with output moderating due to lower growth in government spending, although exporting sectors would benefit from a recovery in global demand.
Inflation would, in the short term, continue to be higher than the objective 3-6 percent range due to an increase in the alcohol levy, private school fees, fuel prices, higher forecasts for food and fuel prices and for inflation in neighbouring South Africa.
“It is, therefore, forecast that inflation will fall within the 3-6 percent objective range in the second quarter of 2012, not in the second quarter of 2011 as was previously forecast,” it said.
“The current state of the economy and assumptions on both the domestic and external economic outlook, as well as the inflation forecast suggest that maintaining the prevailing level of interest rates is consistent with the achievement of the bank’s 3-6 percent inflation objective in the medium term.”