Botswana's central bank held its bank rate steady at 7.5 percent, saying the medium-term outlook for inflation is positive with forecasts for it to remain within the bank's 3-6 percent target range.
The Bank of Botswana, which cut rates by 200 basis points in 2013 as inflation eased, said moderate domestic demand and benign external prices contributed to the positive inflation outlook.
However, the bank cautioned that the outlook for inflation could be affected by unanticipated large rises in administered prices and levies, higher-than-expected increases in international food and oil pries, along with an increase in demand and inflation expectations from substantial wage rises.
Botswana's inflation rate was steady at 4.1 percent in December and November, a low for 2013.
Botswana's Gross Domestic Product expanded by 0.4 percent in the third quarter from the second quarter for annual growth of 7.1 percent.
In the 12 months to September 2013, the central bank said GDP growth was estimated at 5.9 percent due to an 11 percent rebound in mining and a 5.1 percent expansion in non-mining output.
The bank said non-mining output is expected to remain below potential in the medium term, generating low inflationary pressures while trends in government expenditure and personal income is expected to contribute to moderate demand on economic activity.