Botswana's central bank kept its Bank Rate steady at 9.5 percent, saying economic output will remain below potential in the medium while inflation is expected to move toward the bank's target in the second half of 2013 but remain above target in the short run due to temporary factors.
Based on its economic assumptions, the Bank of Botswana said that keeping its rates on hold would be consistent with inflation meeting the bank's 3-6 percent target range. The bank has held rates steady since December 2010.
Inflation in Botswana rose to 7.4 percent in November from 7.1 percent in October, mainly due to higher administered prices, but weak domestic demand and modest external inflationary pressures contribute to a positive inflation outlook, the bank said.
"However, the underlying trend remains downwards and, in the circumstances, inflation is expected to converge to the medium-term objective range in the second half of 2013," the bank said in a statement after a meeting of its Monetary Policy Committee on Dec. 24.
Botswana's Gross Domestic Product rose by 8.7 percent to the year ended in June with non-mining output up by 12.1 percent but mining output was down by 8 percent. But non-mining GDP is expected to remain below potential in the medium term and therefore be non-inflationary, the bank said.