GABORONE, June 14 (Xinhua) -- Botswana's central bank on Thursday reduced the monetary policy rate (MoPR) by 25 basis points from 2.4 percent to 2.15 percent.

According to the Bank of Botswana (BoB), the decision comes after observing that the economy is expected to operate below full capacity in the short term and not generate demand-driven inflationary pressures.

"The current state of the economy and the outlook for both domestic and external economic activity provide scope to ease monetary policy. Accordingly, we decided to decrease MoPR to 2.15 percent," said BoB Governor Cornelius Dekop when addressing journalists in Gaborone, Botswana's capital.

Dekop further said the risks to inflation trajectory were assessed to be balanced, as inflation is forecast to remain low but within the objective range set by the central bank of between 3 to 6 percent in the medium term, averaging 3.6 percent in 2024 and 4.5 percent in 2025.

However, the BoB has warned that inflation could be higher than projected if international commodity prices increase beyond current forecasts, supply and logistical constraints persist and geo-economics fragmentation escalates. In addition, inflation may be heightened by possible upward adjustment in prices controlled by the government that are not factored in the current projection and any increase in domestic food prices due to the prevailing El Nino induced drought conditions in Southern Africa.

"These upside risks are likely to be offset by the possibility of a weaker domestic and global economic activity, as well as any decrease in international commodity prices," said Dekop. Enditem

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