Botswana's central bank kept its benchmark Bank Rate at 5.0 percent, citing a positive outlook for inflation that is forecast to remain within its 3-6 percent target range in the medium term, and an economy that is operating close to, but below capacity.
The Bank of Botswana (BOB), which has maintained its rate since cutting it to the current level in October 2017, said subdued domestic demand and a modest increase in foreign prices contributed to the positive outlook for inflation while upside risks stem from higher commodity prices and any unanticipated upward rise in administered prices, government levies and taxes.
Botswana's inflation rate rose to 3.2 percent in December 2017 from 2.9 percent in November while Gross Domestic Product grew by 1.8 percent in the 12 months to September, down from 2.3 percent in the same 2016 period.
Slower growth reflects a slowdown in non-mining activity and a 12.3 percent contraction in mining output in the 12 months to September 2017 compared with a 11 percent fall in 2016.
"GDP is projected to expand in the short-to-medium term, driven largely by the recover in mining activity," BOB said.
Botswana's pula has been trending higher since January 2016 and was trading at 9.6 to the U.S. dollar today, up 2.8 percent this year.
