Botswana’s central bank left its benchmark interest rate unchanged at 3.5 percent, as the country grapples with a prolonged slump in the global diamond market and inflation expected to stay within target in the medium term.
The decision marks the first policy move under newly appointed governor Lesego Moseki, who said the economy continued to run below capacity, supporting a “broadly accommodative” stance.
“The economy is expected to continue to operate below full capacity. This outlook supports maintaining a broadly accommodative monetary policy stance,” Moseki told reporters.
Botswana’s economy has been under strain for more than a year due to weak diamond demand — the backbone of its exports. Real GDP fell 3 percent in the year to June 2025, deepening from a 0.6 percent contraction in the previous 12 months.
Inflation rose to 3.9 percent in October from 3.7 percent in September but remained within the bank’s 3 percent–6 percent target range. The central bank expects inflation to average 5.3 percent in 2026, compared with 2.7 percent this year, and warned risks were skewed toward higher price pressures.
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The Bank of Botswana last raised its main lending rate in October, delivering a sharp 160 basis-point hike to close the gap with market rates, which had surged amid a liquidity squeeze linked to the economic slowdown.
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