Nonetheless, the neutral real rate of interest—or the level of the real federal funds rate that is consistent with output growing close to its potential rate with full employment and stable inflation —is expected to remain low both in the near term and in the longer run, and inflation is only slowly recovering from a protracted period of low levels.
It is with this in mind that I wish to take this opportunity to inform you and, through you, all stakeholders that the Bank of Botswana has decided to reduce the Primary Reserve Requirement for banks from the current 10 percent to 5 percent, with effect from April 1, 2015. This will release a total of P2.3 billion to augment the banks’ loanable funds.