Botswana’s central bank kept its benchmark lending rate unchanged at 1.90 percent, extending a run of six meetings without policy adjustments, as it weighed upside risks to inflation against a sluggish domestic economy, Reuters reported.

Annual inflation stood at 1.1 per cent in July, well below the bank’s 3–6 per cent target range. But the Bank of Botswana revised its outlook upward, forecasting average inflation of 3.5 per cent in 2025 and 5.9 per cent in 2026, compared with its June projections of 2.7 per cent and 4.6 per cent.

Governor Cornelius Dekop said risks were “tilted to the upside,” citing the market response to the widening of the pula’s trading margins in July, which triggered price increases for some goods and services.

Last month, the government said it would accelerate the depreciation of the pula, targeting a 2.76 per cent decline over the next year compared with the 1.51 per cent announced in December. Authorities said the move aimed to boost the competitiveness of local goods and services, curb foreign exchange demand, and preserve reserves. Another review of the currency framework is expected by year-end.

Despite the tighter inflation outlook, Dekop said monetary policy remained sufficiently accommodative to support recovery and shield the economy from weak global demand.

Botswana, once viewed as one of Africa’s most resilient economies, has been hit hard by a downturn in the diamond industry. GDP contracted by 3 per cent last year and analysts warn growth could slip again in 2025.