The Central Bank of Botswana slashed its benchmark interest rate by 25 bps to 4.75% on August 29th 2019. It was the first rate cut since October 2017, to the lowest level since at least 2006, in a bid to foster growth. Policymakers said that inflation outlook remains positive amid subdued domestic demand pressures and modest rise in foreign prices. Headline inflation rose to a four-month high of 2.9% in July 2019 from 2.8% in June, below but closer to the lower bound of the bank's target range (3-6%); and it is projected to revert within the target in Q1 2020. On the other hand, the economy is projected to operate close to, but below full capacity in the short to medium term; the GDP is expected to rise by 4.2% and 4.8% in 2019 and 2020, respectively. Interest Rate in Botswana averaged 9.34 percent from 2006 until 2019, reaching an all time high of 15.50 percent in June of 2008 and a record low of 4.75 percent in August of 2019.
Interest Rate in Botswana is expected to be 4.75 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Botswana to stand at 4.50 in 12 months time. In the long-term, the Botswana Interest Rate is projected to trend around 4.00 percent in 2020, according to our econometric models.