The Bank of Botswana has raised its interest rate to 5.5% from 3.5%, becoming the first central bank in Africa to respond to inflation fueled by the ongoing U.S.-Israel-Iran conflict.
Inflation in Botswana surged to 8.9% in April, driven by global energy supply disruptions and rising fuel prices. The move is seen as a bellwether for other emerging market central banks.
Market pricing now reflects a 100% probability that Brazil's central bank will similarly hike the Selic rate. In contrast, the Federal Reserve and ECB are seen as less likely to cut rates soon. Observers are watching Governor Gabriel Galípolo for guidance on Brazil's next steps.