Botswana’s central bank has slashed the country’s bank rate by half a percentage point to 8.5 percent, the bank announced after a meeting of its Monetary Policy Committee (MPC) on Tuesday.
“The current state of the economy, which is characterised by output growing below potential and high unemployment, provides an opportunity for non-inflationary stimulus to the economy,” the Bank of Botswana (BoB) said in a statement.
“Assumptions on both the domestic and external economic outlook, as well as the inflation forecast, suggest that a more accommodative monetary policy stance is consistent with the achievement of the Bank’s 3-6 percent inflation objective in the medium term,” it said.
The cut follows another half percentage point slash in May, with both cuts coming after two consecutive years of keeping the rate steady.
Meanwhile, BoB has said it expects inflation to continue to ease following a drop from 7.2 percent in April to 6.1 percent in May.
“Weak domestic demand and the forecast benign external inflationary pressures contribute to the positive inflation outlook in the medium term. In the short term, inflation is expected to be close to the upper end of the Bank’s objective range of 3-6 percent,” it said.