Macroeconomic Forecast Botswana

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Inflation in May fell significantly to 8.4% y-o-y from 10.2% y-o-y in April, driven by the continued fall in transport costs. Contracting by 12.7% y-o-y, this more than offset still high food prices. Food inflation decelerated markedly from 20.1% y-o-y, but remains elevated at 18.0% y-o-y. With the inflation picture so favourable, we have revised down our end-year target to 6.3%. With real interest rates heading higher, this also gives the Bank of Botswana to continue to cut its policy rate to 10.00% by year-end.