BoB instructs commercial banks not to increase lending rates
The central bank, the Bank of Botswana (BoB), has once again instructed commercial banks not to increase their lending rates.
The Monetary Policy Committee (MPC) reiterated this stance during their last meeting of the year on Thursday, 4 December.
The MPC expect the economy to continue operating below full capacity in the short-to-medium term, with no demand-driven inflationary pressures (when both prices of goods and sales volumes increase).
Addressing the media, newly appointed BoB Governor Lesego Moseki said although inflation is likely to breach the upper bound of the objective range, this is only expected to be temporary.
“We anticipate inflation to be within the objective range of 3-6 percent in the medium term,” he said.
Moseki explained this calls for maintaining an accommodative monetary policy stance that supports economic activity, especially implementation of economic transformation initiatives.
“The MPC’s assessment is that the policy adjustments made thus far and communicated have helped ease liquidity conditions and are positive for the foreign exchange market,” said the Governor.
Moseki further revealed the MPC decided to maintain the Monetary Policy Rate (MoPR) at 3.5 percent, including repositories and reverse repositories. The Standing Deposit Facility (SDF) rate is maintained at 2.5 percent, 100 basis points below the MoPR, and the Standing Credit Facility (SCF) rate is maintained at 4.5 percent, 100 basis points above the MoPR.
Reinforcing the instruction from the 30 October meeting, the MPC directed commercial banks not to increase their prime lending rates.
“The Bank will continue to monitor developments closely and implement appropriate policy actions consistent with its mandate to maintain price stability and safeguard financial system stability,” Moseki said.
The committee warned that the increased uncertainty and continued weakness in the diamond market have put pressure on Botswana’s revenue and foreign reserves.
“It is therefore essential going into 2026 that growth-enhancing initiatives and economic diversification efforts be implemented with greater rigour and urgency to support a sustainable recovery and improve the fiscal and external situation.”
The BoB boss advised the country should leverage its institutional strength and sound macroeconomic policy frameworks to attract investments that have the potential to drive economic transformation.
