Bank of Botswana`s new inflation target a tall order

source: Sunday Standard

by Sunday Standard Reporter
01.03.2008 12:32:55 P

Linah Mohohlo, the Central Bank governor made a disparate appeal last week as she launched a three-year rolling inflation target of 3-to- 6 percent which analysts said Friday that it is a tall order for the bank.

The move by the central bank is a shift from the usual short term targets to a medium to long term target in line with the international practice. However, the central bank, which is currently struggling to contain inflation rate to last year’s targets of 4-to-7 percent with inflation running as high as 8.4 percent as for last month, is faced with a raft of challenges to achieve its new target.

“It is a good move to hear that the central bank is aiming to bring the inflation rate to much lower rates of 3-to-6 percent. But there are lots of challenges which make it very difficult to achieve those targets,” an analyst at Capital Securities, Leutwetse Tumelo said on Friday.

He said with fuel prices running as high as US $ 100 per barrel and salary increases as high as 15 percent, this will present some challenges to the bank.

“There is no way you can avoid a hike in administrative prices if fuel is so high. And the 15 percent salary increase announced will mean that people are [continue reading]

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