Botswana: BOB Holds Inflation Outlook Above Target Range

What the report says

Bank of Botswana says inflation in Botswana has eased, but remains well above its target band. In a Monetary Policy Committee statement in Gaborone, Governor Lesego Moseki said headline inflation fell to 9.4% in July 2026 from 10.7% in June, while the central bank’s medium-term objective remains 3% to 6%.

According to the report, the main driver of the monthly decline was a reduction in domestic fuel prices on July 7, which lowered headline inflation by 2.3 percentage points. Even so, the bank expects inflation to stay outside the target range until the first quarter of 2027 because of continuing supply-side pressures, including high fuel costs and elevated electricity tariffs.

The central bank projected average inflation of 7.9% in 2026 before it moves closer to the target in 2027, when it is forecast to average 4.9%. Moseki said the risks to the outlook are still tilted upward, citing possible knock-on effects from fuel and electricity prices, food inflation linked to foot-and-mouth disease restrictions, weather-related uncertainty, and higher global oil, gas and fertilizer prices. He also warned that trade tensions and tariffs could add to price pressures.

More broadly, the report suggests the Bank of Botswana remains cautious about the cost-of-living outlook and the possible effect of external shocks on the domestic economy, including the diamond sector.