Finance minister Kenneth Matambo has told parliament that inflation is expected to remain within Bank of Botswana’s (BoB) objective range of 3-6 percent in the medium term.
Presenting the 2015/2016 budget speech on Monday the minister stated that domestic inflation rose from 4.1 percent in December 2013 to 4.6 percent in August 2014, and has since declined to 3.8 percent in December 2014, remaining within the Bank of Botswana's objective range of 3-6 percent. “The projected external price developments and lower forecasts for oil prices will result in moderate pressure on domestic prices. Therefore, inflation is expected to remain within the Bank's objective range in the medium term,” said Matambo.
He further noted that in terms of the monetary policy, the focus remains on monetary stability, which fosters international competitiveness of the domestic industries and supports the broader national objectives of sustainable economic growth and employment creation. With the positive medium-term inflation outlook and credit developments, the Bank of Botswana continued to maintain an accommodative monetary policy stance during the year, he stated.
The Bank Rate was maintained at 7.5 percent in 2014, after it was last adjusted downwards by 50 basis points in December 2013. At the same time, commercial bank credit grew by 14.0 percent from P39.4 billion in November 2013 to P44.9 billion in November 2014, which is supportive to economic growth.