Botswana: Botswana projects accommodative monetary policy

Gaborone, Botswana (PANA) - Botswana’s central bank says it projects that monetary conditions will continue to be accommodative in the short- to medium-term, largely on account of negative real interest rates.

The Bank of Botswana (BoB) on Tuesday released a Mid-term Review of the 2017 Monetary Policy Statement, announcing that the accommodative monetary policy stance is supportive of growth in economic activity going forward.

“The current state of the economy and the projected performance as well as the prospects for the financial sector, along with the positive inflation outlook, suggest that maintaining an accommodative monetary policy stance is consistent with keeping inflation within the 3 – 6 percent objective range in the medium term,” according to part of the review.

BoB observed that inflation increased over the first six months of the year, but remained within the Bank’s objective range of 3 – 6 percent in the first six months of 2017, against the background of benign domestic demand pressures, modest wage growth and impact of the increase in administered prices, as well as favourable foreign price developments.

The Bank considers that maintenance of an accommodative monetary policy is consistent with achieving the inflation objective in the medium term and appropriate for stimulating economic growth.

“Looking ahead, inflation is forecast to breach the lower bound of the Bank’s objective range in the medium term.”

Meanwhile, the Bank said its formulation and implementation of monetary policy will focus on entrenching expectations of low and sustainable inflation, through timely response to price developments, while ensuring that credit and other market developments are consistent with the maintenance of financial stability.

In addition, the review says the Bank remains committed to responding appropriately to ensure price and financial stability without undermining growth in economic activities.
-0- PANA DRW/VAO 30Aug2017

30 august 2017 13:19:02

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