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Bank of Botswana Monetary Policy Committee (MPC) Reduces Monetary Policy Rate (MoPR) By 25 Basis Points From 2.4 %t to 2.15 %.

 
 
 
 
Monetary Policy Committee Meets 
13 June 2024 
Monetary Policy Rate cut to 2.15 percent 
At the meeting held on 13 June 2024, the Monetary Policy Committee (MPC) of  the Bank of Botswana reduced the Monetary Policy Rate (MoPR) by 25 basis points  from 2.4 percent to 2.15 percent. 
 
INFLATION 
 
Headline inflation was 3.1 percent in April 2024 and is projected to remain within  the 3 – 6 percent objective range into the medium term. The risks to this inflation  trajectory were assessed to be balanced. 
The MPC observes that inflation could be higher than projected if international  commodity prices increase beyond current forecasts, supply and logistical  constraints persist and geoeconomic fragmentation escalates. Furthermore,  inflation may be heightened by possible upward adjustment in prices controlled by  government (administered prices) that are not factored in the current projection 
and any increase in domestic food prices due to the prevailing El Niño induced  drought conditions in Southern Africa. However, these upside risks are offset by the possibility of weaker domestic and global economic activity, as well as any  decrease in international commodity prices.
 
 
ECONOMIC PERFORMANCE 
 
As reported in April, real gross domestic product (GDP) grew by 2.7 percent in 2023,  compared to 5.5 percent in 2022. The slowdown was attributable to subdued  performance across most sectors of the economy, including the mining sector. Meanwhile, economic activity remained restrained in the first half of 2024, due to unfavourable global economic conditions and geopolitical events, as well as domestic structural constraints.  
According to the April 2024 World Economic Outlook, global output growth is  forecast at 3.2 percent for both 2024 and 2025, the same as in 2023. 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 continues to note the potential growth-enhancing economic  transformation reforms and supportive macroeconomic policies underpinned by  mindset change. These include the stimulus budget announced on 5 February 2024,  by the Honourable Minister of Finance; supportive monetary and fiscal policies;  improvement in water and electricity supply; implementation of the Economic  Reform and Transformation Plan and Transitional National Development Plan;  infrastructure projects and initiatives announced in the 2024 Budget Speech; and various new and amended legislation. 
 
DECISION 
 
As we previously observed, 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 low but within the objective  range in the medium term, averaging 3.6 percent in 2024 and 4.5 percent in 2025.  Similarly, businesses also expect inflation to be within the medium-term objective  range; thus, inflation expectations are aligned to the inflation objective (well  anchored). Therefore, the current state of the economy and the outlook for both  domestic and external economic activity provide scope to ease monetary policy.  Accordingly, the MPC decided to decrease MoPR by 25 basis points to 2.15 percent.
 
 
Consequently, 
(a) the 7-day Bank of Botswana Certificates auctions, repos and reverse repos  will be conducted at the MoPR of 2.15 percent; 
(b) the Standing Deposit Facility (SDF) Rate is reduced to 1.15 percent, 100 basis  points below the MoPR; and 
(c) the Standing Credit Facility (SCF) Rate reduces to 3.15 percent, 100 basis  points above the MoPR. 
 
MEETINGS OF THE MPC 
 
The next MPC meetings for 2024 are scheduled as follows: 
 
22 August 2024 
31 October 2024 
5 December 2024 
Note 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

 

 

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