##nching expectations of low, predictable and sustainable inflation, through timely response to price developments, while ensuring that credit and other market developments are in line with durable stability of the financial system. the bank remains committed to monitoring economic and financial developments with a view to ensuring price and financial stability, without undermining sustainable economic growth. 5. 3 broadly, the bank contributes to macroeconomic stability and policy congruence through the pursuit and attainment of its primary objectives and coordination with relevant institutions with respect to price and financial stability, as well as stability of the inflation - adjusted trade - weighted exchange rate. by focusing and delivering on its specific roles, the bank contributes to the maintenance of a conducive environment for structural reforms and transformation initiatives to gain traction, potentially leading to higher rates of growth needed to transition the economy to high income status. given that both monetary policy and fiscal policy are expansionary, immediate implementation of transformation initiatives and structural reforms are expected to raise prospects for faster growth and economic diversification. against this background, enhanced productivity / innovation ( including greater production capacity ) of industry and effectiveness of support institutions and service providers would help improve growth prospects for the economy in an environment of price and financial stability. it is observed, in this regard, that effective implementation, value recognition, user benefit and, overall, traction and longterm impact of conducive macroeconomic policies, economic transformation and policy reforms are premised on mindset change that discerns and harnesses the economic and welfare opportunities. monetary policy statement february 2024 appendix table a1 : 2023 monetary policy decisions central bank united states federal reserve bank of england policy rate as at december inflation target ( % ) 5. 25 – 5. 5 percent 5. 25 percent policy change from previous year asset purchase programmes likely policy decision in 2024 the fomc continued to reduce its holdings of treasury securities, agency debt and mortgage - backed securities. given that the fomc expects inflation to be closer to the 2 percent target in 2026, rates are expected to remain higher for longer. the fed is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee ’ s goals. the mpc decided to reduce the stock of uk government bond purchases held for monetary policy purposes by £100 billion over the 12 - month period from october 2023 to september 2024. the first auction of the annual programme took place on october, 2 2023. further tightening of the

2 13. 3 1. 0 0. 8 0. 3 0. 9 0. 5 2. 8 0. 3 3. 1 2. 6 25. 0 19. 1 5. 9 33. 1 11. 2 0. 7 0. 6 0. 1 0. 7 0. 4 2. 3 0. 2 3. 0 2. 3 21. 9 16. 9 5. 1 30. 4 10. 5 0. 6 0. 6 0. 2 0. 7 0. 4 2. 2 0. 2 2. 7 2. 2 20. 2 14. 7 5. 4 30. 1 10. 5 1. 1 0. 7 0. 2 0. 6 0. 3 2. 0 0. 3 2. 6 2. 2 19. 5 13. 9 5. 6 source : commercial banks, statistics botswana and bank of botswana calculations. notes : 1. although not shown in the table, electricity, and water, other and non ‑ resident sub ‑ sectors are included in the business credit to gdp ratio. 2. data covering the twelve months to september 2023. 3. includes motor vehicle, personal and credit card loans. - 2 - 4 - 6 - 8 actual credit - to - gdp trend gap ( rhs ) source : bank of botswana. monetary policy statement february 2024 percent 20 018 20 q1 20 q2 20 q3 20 q4 20 q1 20 q2 20 q3 20 q4 20 q1 20 q2 20 q3 20 q4 20 q1 20 q2 20 q3 20 q4 20 q1 20 q2 q percent chart 3. 10 : aggregate credit to gdp gap 3. 23 the increase in credit was partly supported by the 11. 2 percent expansion in deposits at commercial banks in 2023, accelerating from 7. 8 percent growth in the prior year ( chart 3. 11 ). within this, the household deposits increased by 11. 3 percent following a contraction of 8. 2 percent in 2022, while business deposits ( excluding parastatals ) increased by 6. 1 percent from the 11. 5 percent increase during the same period. by component, current account deposits increased by 24. 6 percent, while interest bearing deposits increased by 4. 4 percent in 2023. deposits in foreign currency accounts increased by 14. 5 percent in the same period. given the slower increase in bank lending than the growth in bank deposits, the financial intermediation ratio fell slightly