Bank of Botswana Keeps Policy Rate at 5.5%

2026-10-29 16:38 By Luisa Carvalho 1 min. read

The Bank of Botswana left its benchmark rate steady at 5.5% on October 29, 2026, extending its pause for a second consecutive meeting.

Policymakers noted that risks to the inflation outlook remain tilted to the upside, mainly due to potential second-round effects from higher domestic fuel prices and electricity tariffs, as well as the under-recovery in fuel prices.

Headline inflation eased to 7.8% in September from 9.3% in August, but remained above the central bank’s 3–6% target range.

The MPC expects inflation to remain above the objective range because of higher cost of fuel and electricity and revert in the second quarter of 2027.

Inflation forecasts were revised upwards accordingly, with average inflation projected at 8.1% in 2026 (from 7.9% previously), and 5.4% in 2027 (from 4.9%).

Meanwhile, the balance of risks to growth remains tilted to the downside, amid geopolitical tensions, climate shocks, El Niño risks, and trade fragmentation.



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Bank of Botswana Keeps Policy Rate at 5.5%
The Bank of Botswana left its benchmark rate steady at 5.5% on October 29, 2026, extending its pause for a second consecutive meeting. Policymakers noted that risks to the inflation outlook remain tilted to the upside, mainly due to potential second-round effects from higher domestic fuel prices and electricity tariffs, as well as the under-recovery in fuel prices. Headline inflation eased to 7.8% in September from 9.3% in August, but remained above the central bank’s 3–6% target range. The MPC expects inflation to remain above the objective range because of higher cost of fuel and electricity and revert in the second quarter of 2027. Inflation forecasts were revised upwards accordingly, with average inflation projected at 8.1% in 2026 (from 7.9% previously), and 5.4% in 2027 (from 4.9%). Meanwhile, the balance of risks to growth remains tilted to the downside, amid geopolitical tensions, climate shocks, El Niño risks, and trade fragmentation.
2026-10-29
Botswana Leaves Monetary Policy Unchanged
The Bank of Botswana kept its benchmark rate steady at 5.5% on August 27, 2026, extending its pause in monetary policy after leaving rates unchanged in June. The decision keeps borrowing costs at their highest level since September 2017. The central bank judged that policy measures implemented so far had helped ease liquidity, improve policy transmission and stabilize the FX market. Policymakers said risks to the inflation outlook remained tilted to the upside, while the growth outlook remained exposed to downside risks. Botswana's annual inflation rate fell to 9.4% in July 2026 from 10.7% previously, but stayed persistently above the 3-6% medium-term objective range. The MPC expects inflation to remain above its target range through Q1 2027, mainly due to supply-side pressures from higher fuel prices, electricity tariffs and related cost-push effects. Inflation is projected to average 7.9% in 2026 before easing to 4.9% in 2027.
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Bank of Botswana Keeps Bank Rate at 5.5% in June
The Bank of Botswana kept its Bank Rate at 5.5% on June 18, 2026, after a 200 basis point increase in the prior meeting, leaving borrowing costs at their highest since September 2017. Policymakers have opted for a wait-and-see stance as they assess the effects of earlier monetary tightening on inflation trends, especially in light of the recent US-Iran agreement to end their conflict and reopen the Strait of Hormuz. The latest CPI data revealed that Botswana’s inflation rate surged to 10.7% in May, marking the highest level since December 2022, driven primarily by a sharp rise in energy prices, while the core inflation rate reached 5.9%, the highest since July 2023.
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