Botswana Central Bank Raises Policy Rate to 3.5 Percent Amid Downturn

TLDR

• The Bank of Botswana has raised its benchmark policy rate sharply from 1.9% to 3.5%, seeking to narrow the gap between its key rate and the higher lending rates charged by commercial banks
• The move follows a second consecutive year of economic contraction, as weak global demand for diamonds continues to weigh on Botswana’s growth and liquidity
• Falling diamond exports have reduced foreign exchange inflows and tightened financial conditions, prompting banks to increase lending rates

The Bank…