Botswana's central bank cut its Bank Rate by another 50 basis points to 8.00 percent, its third rate cut this year, saying below-trend economic activity and high unemployment "provides scope for monetary stimulus to spur stronger output growth."
The Bank of Botswana, which has cut rates by 150 basis points this year, said weak domestic demand and benign external inflationary pressures contribute to the positive outlook for inflation in the medium term but this positive outlook could be negatively affected by large increases in administered prices and government levies along with higher international food prices.
"It is anticipated that non-mining GDP will remain below potential in the medium term and will not be inflationary," the central bank said.
In the first quarter, Botswana's Gross Domestic Product contracted by 2.2 percent from the fourth quarter for annual growth of 3.2 percent, down from 4.1 percent. Botswana's non-mining GDP expanded while the mining sector shrunk.
Botswana's inflation rate fell to 5.8 percent in June from 6.1 percent in May, within the central bank's target range of 3-6 percent.