You will agree that export competitiveness cannot be achieved unless Botswana’s inflation is low and comparable to the average of trading partner countries, such as South Africa, the United Kingdom, the United States of America and mainland Europe. This requirement is the basis for determining the desired range of inflation.
The framework within which policy is determined identifies the key relationships of the inflationary process. It is a well-known fact that excessive expenditure in relation to available goods and services in any given period pushes up prices - this is the concept referred to as demand-pull inflation.