Botswana maintains rate, inflation seen in line with target

    Botswana's central bank maintained its Bank Rate at 7.5 percent, saying the outlook for inflation, the current state of the economy along with the domestic and external prospects are consisting with maintaining inflation within the bank's medium-term objective of 3 - 6 percent.
    The Bank of Botswana, which has held its rate steady this year after cutting it by 200 basis points in 2013, said economic output was estimated to have grown by 5.9 percent in the 12 months to March, based on a 14.2 percent increase in mining and a 4.6 percent rise in non-mining output.
    However, non-mining activity is expected to remain below potential in the medium term and the impact of domestic demand on economic activity is projected to be modest.
    In June the central bank's head of monetary and financial stability, Kealegoga Masalila, forecast that the economy of Botswana, the world's biggest diamond producer, would probably grow by 5.1 percent this year, below 2013's 5.9 percent.
    Botswana's inflation rate eased marginally to 4.5 percent in July from 4.55 percent in June and the rate has remained between 4 and 5 percent so far this year.
    "Weak domestic demand and the projected benign external prices developments result in a positive inflation outlook for the medium term," the central bank said, adding this outlook could be adversely affected by any large rise in administered prices and government levies as well as international oil prices that are higher than forecast.

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