linah k mohohlo : botswana ’ s monetary policy statement for 2014 remarks by ms linah k mohohlo, governor of the bank of botswana, at the launch of the monetary policy statement for 2014, gaborone, 28 february 2014. * * * i wish to welcome you to the launch of the monetary policy statement for 2014, which is by now well - known to be the premier event for the bank. the statement informs stakeholders how one of the bank ’ s key functions is discharged, and that is the formulation and implementation of monetary policy. the statement is issued each year because the bank attaches importance to the need for transparency and accountability in the discharge of this key mandate. that is why your dedicated patronage on this occasion is sincerely valued and appreciated. as has been regularly explained, the principal objective of monetary policy is to achieve sustainable, low and predictable level of inflation and, at the same time, ensuring that the economy is financially stable. this is due to the fact that sustainably low inflation and a conducive financial environment support economic growth by fostering savings and productive investment, while promoting the competitiveness of domestic producers and contributing towards a more equitable income distribution. this is the seventeenth year since the bank has issued the annual monetary policy statement ; and perhaps this year ’ s statement is of particular interest. it is the first time that the launch takes place in circumstances in which inflation has been comfortably within the bank ’ s medium - term objective range for a sustained period. this outcome has afforded the bank the scope to ease monetary policy in the course of 2013. i will have more to say about this shortly. while this is, without a doubt, a positive development, it does not suggest a time for complacency with respect to the bank ’ s approach to monetary policy. on the contrary, the early weeks of 2014 have reminded us of the considerable uncertainty that continues to surround prospects for the global economy, and the vulnerability of emerging markets to related risks is turning out to be particularly acute. therefore, the vigilance of the bank, through the work of the monetary policy committee and supporting structures remains undiminished. as i intimated earlier, one of the core functions of the bank is conducting monetary policy. indeed, the framework through which the bank carries out this function is now widelyknown ; you can bear testimony to the fact that any adjustment to policy is communicated to the public immediately after each meeting of the monetary policy committee

may, any upward adjustment in administered prices and government levies or any increase in international food and oil prices beyond current forecasts will present upside risks to the inflation outlook. furthermore, any substantial civil service wage increase could also generate inflationary pressures through higher demand and inflation expectations. distinguished ladies and gentlemen : i conclude by reiterating that the domestic economy is expected to be characterised by an environment of benign inflationary developments in 2014. the bank ’ s formulation and implementation of monetary policy will focus on entrenching expectations of low and sustainable inflation in the medium term, through timely responses to price developments, while ensuring that credit and other market developments are consistent with lasting financial stability. i thank you for your attention. copies of the detailed monetary policy statement are in the foyer of the auditorium ; please obtain a copy so you can read it at your leisure. bis central bankers ’ speeches