At its meeting today, the Monetary Policy Committee (MPC) maintained the Bank Rate unchanged at 10 percent. In September, inflation rose slightly, to 7 percent, and is set to remain above the top end of the 3 – 6 percent objective range in the short term until the impact of transient factors such the increase in value added tax (VAT) and the upward adjustments in administered prices start to dissipate. It is currently anticipated that inflation will fall within the objective range in the second quarter of 2011. For more information, see the press release accompanying the decision.

In another policy development, the Primary Reserve Requirement for commercial banks has been raised from 5 percent to 6.5 percent with effect from November 1, 2010. Primary Reserves are the commercial banks’ non-interest earning balances maintained at the Bank of Botswana, and the  decision is intended to reduce the amount of liquidity that is mopped up through Bank of Botswana Certificates.