At the end of February, 1997 the Bank of Botswana (BoB) reduced its lending rate to financial institutions from 13% to 12.5% p.a. A statement was issued "the Bank of Botswana feels it is opportune to signal lower nominal interest rates in Botswana because of the inflationary trend. Over the past year Botswana's interest has come down from 10,5% in January, 1996 to 9.1% in January, 1997. The bank believes that the drop in interest rates will cheer productive economic activity, while providing positive encouragement for mobilising savings and attracting foreign direct investment".
Although the commercial banks do not borrow significant amounts from BoB, they are expected to follow its lead with a comparable drop in their lending rates.
The content of this article is intended to provide general information on the subject matter. It is not therefor a substitute for specialist advice.
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