Botswana’s central bank has kept its benchmark interest rate unchanged at 5.5 percent, saying previous increases have helped improve liquidity conditions and support the country’s foreign exchange market.
The Bank of Botswana said monetary policy adjustments made in October 2025 and April 2026 had helped reduce funding pressures and improve the transmission of policy decisions across the economy.
“This has resulted in moderation in funding costs and enhanced prospects for better monetary policy transmission,” Governor Lesego Moseki said.
The decision follows two major rate increases a 160-basis-point hike in October and a 200-basis-point increase in April as the central bank responded to rising inflation pressures.
Inflation remains significantly above Botswana’s target range of 3 to 6 percent, reaching 10.7 percent year-on-year in May.
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Moseki said inflation is expected to remain elevated in the short term, averaging around 9 percent in 2026 before easing to about 5.5 percent in 2027.
Botswana’s economy has been under pressure from a prolonged downturn in the global diamond market, with economic contractions recorded over the past two years.
The country’s diamond-dependent economy has also faced additional pressure from global uncertainty, including the impact of the Iran conflict on energy prices and inflation.
Despite the challenges, the central bank said domestic liquidity conditions have improved since the final quarter of 2025, supported by increased government spending, stronger diamond revenues and recent monetary policy measures.
The bank said maintaining the current policy rate would allow it to continue monitoring inflation trends while supporting economic stability.
Botswana is one of the world’s largest diamond producers, and the performance of the sector remains a key driver of government revenue, exports and overall economic growth.
