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Botswana Says Accommodative Monetary Policy to Help Spur Economy

June 9 (Bloomberg) -- Botswana’s central bank said it will stick to its accommodative monetary policy to help support economic growth that’s set to slow because of power shortages.

The economy of the world’s biggest producer of diamonds will probably expand 5.1 percent this year, Kealeboga Masalila, the head of monetary and financial stability at the Bank of Botswana, told reporters today in the capital, Gaborone. The economy grew 5.9 percent last year.

“Electricity and water challenges will hinder growth,” Masalila said. “Diamond production and an accommodative monetary stance will help to support economic activity via interest-rate adjustments.”

The central bank has kept its benchmark interest rate unchanged since lowering it by half a percentage point to 7.5 percent in December. Inflation in the landlocked nation located north of South Africa will probably remain inside the 3 percent to 6 percent target band in the medium term, Masalila said.

Botswana’s currency, the pula, is pegged to a basket of currencies that includes South Africa’s rand. Masalila said the rand appears to have “stabilized” against major currencies.

To contact the reporters on this story: Mbongeni Mguni in Botswana at mmguni@bloomberg.net; Amogelang Mbatha in Johannesburg at ambatha@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net Dylan Griffiths

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