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Bank of Botswana Monetary Policy Committee (MPC) Keeps Monetary Policy Rate (MoPR) at 2.4 Percent.

 

Press Release 
Monetary Policy Committee Meets 
February 22, 2024 
Monetary Policy Rate Maintained 
At the meeting held on February 22, 2024, the Monetary Policy Committee (MPC)  of the Bank of Botswana maintained the Monetary Policy Rate (MoPR) at 2.4 percent. 
 
INFLATION 
 
Headline inflation increased from 3.5 percent in December 2023 to 3.9 percent in  January 2024, remaining within the medium-term objective range of 3 – 6 percent.  The increase in inflation was mainly due to the diminishing impact of the decrease  in domestic fuel prices in the corresponding period in 2023 (base effects). Inflation  is forecast to remain at 3.9 percent in February 2024. The MPC projects inflation to 
remain within the objective range into the medium term. 
 
The MPC observes that inflation could be higher than projected if international  commodity prices increase beyond current forecasts, supply and logistical  constraints persist and the reversal of global economic integration (geo-economic  fragmentation). Furthermore, inflation may be heightened by possible upward  adjustment in prices controlled by government (administered prices) that is not  factored in the current projection and any increase in domestic food prices due to  the projected El Niño conditions in Southern Africa. However, inflation could be  lower than currently anticipated because of the possibility of weaker domestic and 
global economic activity, as well as any decrease in international commodity  prices. 
 
ECONOMIC GROWTH 
 
Real gross domestic product (GDP) is estimated to have expanded by 3.2 percent  in 2023, compared to 5.5 percent in 2022. The slowdown is mainly attributable to  subdued mining activity. 
According to the January 2024 World Economic Outlook Update, global output  growth was 3.5 percent in 2023, and is forecast to be 3.1 percent in 2024 before  rising modestly to 3.2 percent in 2025. For Botswana, the Ministry of Finance  projects growth to accelerate to 4.2 percent and 5.4 percent in 2024 and 2025,  respectively. 
 
The MPC notes the potential growth-enhancing economic transformation reforms  and supportive macroeconomic policies as underpinned by the Mindset Change initiative. These include, in particular, the stimulus budget announced on February  5, 2024, by the Honourable Minister of Finance; supportive monetary and fiscal  policies; improvement in water and electricity supply; implementation of the April  2023 – March 2025 Transitional National Development Plan; as well as reforms to  further improve the business environment. 
 
DECISION 
 
The MPC recognises that the economy is expected to operate below full capacity  in the short term and, therefore, not generate demand-driven inflationary  pressures. Furthermore, inflation is forecast to remain within the objective range  in the medium term, averaging 4 percent in 2024 and 5 percent in 2025. Businesses  also expect inflation to be within the medium-term objective range; thus, inflation  expectations are well anchored. Hence, the MPC decided to maintain the MoPR at  2.4 percent. 
Accordingly,
(a) the 7-day Bank of Botswana Certificates auctions, repos and reverse repos will be conducted at the MoPR of 2.4 percent; 
(b) the Standing Deposit Facility (SDF) Rate is maintained at 1.4 percent, 100  basis points below the MoPR; and 
(c) the Standing Credit Facility (SCF) Rate remains at 3.4 percent, 100 basis  points above the MoPR. 
 
MEETINGS OF THE MPC 
 
The MPC meetings for 2024 are scheduled as follows: 
April 26, 2024 
June 13, 2024 
August 22, 2024 
October 31, 2024 
December 5, 2024 
 
Notes to Editors 
 
The MPC, chaired by the Governor, is a statutory committee established by the Bank of Botswana  (Amendment) Act, 2022. The Committee comprises nine members, four of whom are external  members. 
Mr Cornelius K Dekop — Governor (Chairman) 
Dr Kealeboga S Masalila — Deputy Governor 
Dr Tshokologo A Kganetsano — Deputy Governor 
Mr Innocent Molalapata — Director, Research and Financial Stability Mr Lesego C Moseki — Director, Financial Markets 
Prof Patricia Makepe — External Member 
Dr Pinkie Kebakile — External Member  
Dr Onkokame Mothobi — External Member 
Dr Taufila Nyamadzabo — External Member

Annex: Inflation Forecast Summary for February 2024 MPC Meeting 
 
 
 
Actual 
Forecast
2023 
2024 
2025
Q1 
Q2 
Q3 
Q4 
Annual  
Average
Q1 
Q2 
Q3 
Q4 
Annual  
Average
Q1 
Q2 
Q3 
Q4 
Annual  
Average
Inflation 
9.4 
6.1 
2.0 
3.5 
5.2 
3.7 
(4.4)
3.8 
(4.8)
4.6 
(5.5)
3.9 
(4.7)
4.0 
(4.9)
4.6 
(4.4)
4.9 
(4.5)
5.1 
(4.9)
5.2 
5.1
5.0 
(4.7)

 

 
Note: Figures in parentheses represent the previous MPC forecast (December 2023) 
Factors contributing to the downward revision of the forecast in the short term include the following: 
 
Domestically 
 
The decrease in domestic fuel prices effected on December 21, 2023. 
 
Externally 
 
1. Downward revision in forecasts for international commodity prices and trading partner countries’ inflation. 2. Projected stronger appreciation of the Pula against the South African rand.
 
 
 
 
Bank Of Botswana 

 

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