Says this might happen in August
Anticipates policy rate to remain stable in the long-term
Stanbic Bank Botswana has indicated that it foresees a potential policy rate cut by the Bank of Botswana (BoB) in August, leading up to the October general elections. Onalethata Letlole, the Global Markets Corporate Dealer at Stanbic Bank, shared this perspective during the bank’s Structured Solutions Seminar.
Letlole disclosed the bank’s expectation of a 0.25% reduction in the policy rate.
The Monetary Policy Committee (MPC) responded to declining inflationary pressures by reducing the policy rate to 2.4% last year. This came as a surprise to some economists. However, at its February meeting, the committee opted to keep the rate unchanged. This decision was influenced by the central bank’s observation that the economy is likely to operate below full capacity in the short term and thus not expected to generate demand-driven inflationary pressures.
“Should we experience another rise in commodity prices, we expect inflation to tick up,” Letlole said.
While Stanbic forecasts a rate cut, Letlole explained that moving forward, they anticipate the policy rate to remain stable without any hikes or reductions, given that inflation is expected to remain within the targeted range of 3 to 6%.
“Reduction of policy rate has also been prudent given the sustained risk of high debt and servicing costs.”
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