BoB lifts inflation view

The Bank of Botswana expects inflation to average 14.6% in the third quarter of this year, an upward revision from 11.6%. The latest forecast stems from the most recent meeting of the Monetary Policy Committee held on August 25 and compares to the previous assessment made by the committee on June 16. The latest revisions are driven by higher fuel prices, upward adjustments of Air Botswana fares and Bokomo prices, as well as higher than expected inflation in July. The Monetary Policy Committee meets roughly once every two months and makes decisions on the direction of interest rates taking into consideration factors such as the projected inflation in the local economy and major trading partners. According to the latest Monetary Policy Report, the central bank expects inflation in the fourth quarter to average 14.2%, up from a forecast of 11.1%. Full-year inflation should average 12.6%, up from the previous forecast of 11.2%. Should the latest forecast for average inflation this year be realised, the rate would equal the average in 2008, a year which saw peaks in inflation including the all-time high of 15.1%. The central bank expects inflation to gradually decline to beneath the three to six percent objective range by the third quarter of 2024.