Over the years, Bank of Botswana (BoB) has successfully maintained low and stable inflation while safeguarding financial system stability.
This nugget of information was shared by BoB’s Director of Research and Financial Stability, Innocent Molalapata, who said the strategy has been extremely beneficial.
Benefits include preserving the purchasing power of incomes, protected savings, encouraged investment, and enhanced the international competitiveness of local producers.
Molalapata was speaking at a public lecture aimed at enhancing public understanding of monetary policy decisions and their impact on the economy.
Organised by Botswana Institute of Banking and Finance (BIBF), Ba Isago University, and BoB, the talk was held under the theme: ‘The Bank of Botswana’s Dual Mandate of Ensuring Price and Financial Stability, and its Role in Fostering Stability and Growth’
Molalapata said the bank’s monetary policy framework aims to keep inflation within a medium-term target range of 3 – 6 percent.
“These efforts ultimately contribute to broader national objectives, such as sustainable economic development and overall national prosperity. What we mean is that we want prices to change at a predictable and acceptable rate. The primary objective is to achieve and maintain stable domestic prices,” explained Molalapata.
Some of the tools used by BoB to implement monetary policy, include the Monetary Policy Rate, open market operations like the auctioning of Bank of Botswana Certificates, and the issuance of one-month BoB Certificates to address structural liquidity issues and support the short end of the yield curve.
The lecture was prompted by the bank’s observation of a gap in public understanding and appreciation of monetary policy and its effect on financial wellbeing.
