Bank of Botswana lifts ban on raising prime lending rates

The Bank of Botswana's Monetary Policy Committee has lifted the moratorium on prime lending rates, allowing banks to adjust rates amid improved liquidity conditions.

The Bank of Botswana's Monetary Policy Committee unanimously removed the moratorium preventing commercial banks from raising prime lending rates. This decision restores banks' ability to adjust benchmark lending rates, giving them greater control over credit pricing as the financial system recovers from a liquidity squeeze.

Improved domestic liquidity, supported by increased government spending and diamond receipts, has eased funding costs for banks. While the removal of the ban allows banks to raise rates if justified, the central bank notes that better liquidity may reduce the need for higher lending costs and could foster competition among banks to offer attractive loan pricing.