Botswana: BOB Holds Inflation Outlook Above Target Range

Gaborone — Botswana's central bank, the Bank of Botswana, reported that headline inflation dropped to 9.4 percent in July 2026, down from 10.7 percent in June. However, this remains above the central bank's medium-term objective range of 3 to 6 percent. Governor Lesego Moseki cited the July 7 reduction of domestic fuel prices as the main reason for the decline, which cut 2.3 percentage points from the headline inflation.

Despite the July drop, Moseki anticipated that inflation would remain above the target range until the first quarter of 2027 due to ongoing supply-side pressures like high fuel costs and higher electricity tariffs. Projections suggest that inflation would average 7.9 percent in 2026, before gradually falling into the target range at 4.9 percent in 2027.

Moseki highlighted that risks to the inflation outlook were mostly on the upside, due to possible second-round effects from higher fuel prices and electricity tariffs, along with food inflation caused by Foot and Mouth Disease restrictions and potential weather effects from an El Niño pattern. Internationally, high oil, gas, and fertilizer prices stemming from Middle East conflicts, rising international food prices, and global trade tensions could also pose threats to price stability.

Moseki advised that if domestic and global economic growth stayed weak, fiscal space remained limited, or international commodity prices dropped unexpectedly, inflation could settle lower than predicted. He stressed the need for vigilant management of inflation expectations to bring inflation back within the medium-term objective range and warned that external developments could raise the cost of living and impact the global diamond market, potentially hindering domestic economic performance.