Potential increase in commodity prices, supply constraints could lead to higher prices

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The potential for increase in international commodity prices beyond current forecasts, and persistence of supply constraints due to possible maintenance of travel restrictions and lockdowns could lead to generalized higher prices, Botswana’s central bank has observed.

In a statement released by the southern African country’s central bank Saturday following a Monetary Policy Committee (MPC) meeting noted that domestically based risk factors related to second-round effects caused by COVID-19 have resulted in inflation outlook to be skewed to the upside.

Aggressive action by government such as the Economic Recovery and Transformation Plan (ERTP) and the country’s central bank to bolster aggregate demand as well a successful rollout of the COVID-19 vaccination program could add pressures to inflation, said the bank.

“However, the risks are moderated by the possibility of weak domestic and global economic activity with a likely further dampening due to periodic lockdowns and other forms of restrictions in response to emergence of new COVID-19 variants,” the bank said in a statement.

Botswana, which has since administered jabs to about 200, 000 people, who are mainly frontline workers, has already arranged vaccines with various manufacturers to inoculate at least the entire adult population estimated to be between 1.6 million and 1.9 million.

Meanwhile, the MPC has decided to maintain the bank rate at 3.5 percent. Enditem

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