- Decision
- Lower
- Rate change
- 25 bps
- discount rate
- 6.75%
The Central Bank of Eswatini’s Monetary Policy Consultative Committee cut the discount rate by 25 bp to 6.75 % on 30 May 2025, aiming to bolster growth as it lowered its 2025 average inflation forecast to 3.6 % and acknowledged a marginal easing in expected GDP expansion to 3.6 % from 3.8 % in 2024. The reduction follows a steady 7.0 % rate held at the January and March 2025 meetings. No adjustments were announced to the liquidity framework or other operating tools. April headline inflation edged up to 3.3 % from 3.1 % in March, but favourable food and transport cost trends underpin the softer outlook; private-sector credit contracted 0.4 % m/m to E24.1 bn yet was 9.2 % higher on the year. Foreign reserves stood at E10.4 bn on 23 May, equal to 3.0 months of import cover, while public debt rose to 37.8 % of GDP. The central bank highlighted weaker global growth tied to prolonged geopolitical tensions and noted that global interest rates, though stabilised, remain restrictive. It pledged to keep monitoring economic conditions and to deploy further measures as needed to uphold price and financial stability.
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.