- Decision
- Maintain
- Rate change
- 0 bps
- discount rate
- 7%
The Central Bank of Eswatini’s Monetary Policy Consultative Committee on 31 January 2025 kept its main policy rate unchanged at 7.0 percent, judging this stance consistent with its price- and financial-stability mandate amid a gradual pick-up in domestic inflation and a moderating growth outlook. The rate is effective 1 February. The Bank noted headline inflation edged up to 3.9 percent y/y in December from 3.7 percent in November, with food, housing and transport costs rising; it now forecasts average inflation at 5.2 percent in 2025 before easing to 4.0 percent in the medium term. Domestic output is expected to expand by 3.6 percent in 2024 after 5.0 percent in 2023, slowing to 3.2 percent in 2025, with risks from project delays, weather and geopolitics. Private-sector credit grew 10.5 percent y/y in December to E24.4 billion, driven by business and mortgage lending. Gross official reserves stood at USD1.0 billion, covering 5.1 months of imports, slightly below November’s 5.2 months. Globally, the IMF projects steady 3.2 percent growth in 2025–26 and a gradual easing of inflation as major central banks maintain tight stances. The central bank reiterated it will continue monitoring global, regional and domestic conditions and stands ready to act to safeguard price stability and support growth.
Rate evolution
From May 2025 to September 2026, the Central Bank of Eswatini cut the discount rate by 25 basis points to 6.75%, held it there through July 2026, and then raised it by 25 basis points to 7.00%. The May 2025 easing was presented as support for growth as activity was expected to slow and credit had contracted, while inflation forecasts were revised down on lower food and transport costs. Later decisions kept policy steady as inflation stayed relatively subdued and growth initially moderated, with the Bank stressing a prudent, flexible balance between supporting domestic activity and safeguarding price and financial stability, particularly the credibility of the peg and the SZL parity to the ZAR, reserve adequacy, and an external backdrop marked by global uncertainty, weather and energy risks, protectionism and mixed inflation trends.
By January and March 2026, despite broad-based gross domestic product growth, headline inflation easing to 1.9%, and lower inflation forecasts after approval of a lower electricity tariff, the Bank still held at 6.75%, saying it would monitor inflation and the currency peg and act cautiously as geopolitical tensions could disrupt global supply chains and raise import prices. On 29 May and 24 July, it again left the discount rate unchanged at 6.75%, taking a cautious approach as growth strengthened in the first quarter of 2026, headline inflation remained low, and risks centred on the oil market and an uncertain global, regional and domestic backdrop. On 25 September, the Bank raised the discount rate to 7.00%, effective 26 September, as global inflationary pressures intensified amid oil supply disruptions linked to Middle East tensions and domestic inflation rose to 2.8% in August, although it lowered its 2026 inflation forecast to 2.52% on weaker-than-expected outcomes, slower food inflation and favourable exchange-rate movements, while flagging risks from the Middle East impasse and a possible El Niño drought.