- Decision
- Maintain
- Rate change
- 0 bps
- CBL rate
- 7.25%
The Monetary Policy Committee of the Central Bank of Lesotho (CBL) left the CBL rate unchanged at 7.25 % at its 25 March 2025 meeting, judging that modestly higher inflation and a recent contraction in output amid global trade and policy uncertainty did not warrant further adjustment. After a 25 bp cut in February, the Committee also kept the net international reserves (NIR) target floor at USD 840 m to safeguard the loti-rand peg and reiterated that banks’ prime lending rates should not exceed the policy rate by more than 350 bp. Consumer price inflation quickened to 4.1 % y/y in February from 3.6 % in January and is seen averaging 5.2 % in 2025, while economic activity fell 4.5 % m/m in January and annual growth is projected to moderate to 2.1 %. Broad money contracted 2.5 % in January even as private-sector credit rose, and a SACU-driven fiscal surplus of 22.1 % of GDP contrasted with a decline in public-debt-to-GDP to 58 %. Net international reserves slipped by USD 105 m to USD 998.9 m between late January and 13 March, though the CBL anticipates a rebound. The Committee highlighted persistent global trade frictions, commodity-price volatility and geopolitical tensions, and said it will continue to monitor these factors and the NIR position, adjusting policy as needed.
Rate evolution
Over the period covered, the Central Bank of Lesotho lowered the policy rate by 75 basis points from 7.25% to 6.50%, shifting from an initial hold to easing, with a pause in September, another cut in November and holds in January and March 2026, before raising it by 25 basis points in May, holding it in July and increasing the CBL Rate by another 25 basis points to 7.00% in September. The initial March hold reflected modest growth, a January contraction, moderate inflation and heightened global uncertainty, while later easing was supported by contained inflation, a fragile recovery and South African Reserve Bank cuts, with decisions throughout anchored by the need to preserve the loti-rand peg through adequate reserves and close regional alignment.
In November, with the economy still subdued, headline inflation moderating, reserves improving and South Africa again easing, the Monetary Policy Committee cut the policy rate to 6.50% and raised the Net International Reserves target floor, while warning that domestic demand and inflation expectations remained elevated. On January 30, 2026, the committee held the rate at 6.50% as domestic activity rebounded, inflation eased to 4.1% in December 2025 and the South African Reserve Bank maintained its rate, and on March 27 it held again as inflation remained contained, reserve buffers stayed strong and the economy operated below potential. On May 29, the committee raised the policy rate to 6.75% after the South African Reserve Bank increased its repo rate to 7.00% and the global energy shock lifted the domestic inflation outlook, before holding the CBL Rate on July 24 as domestic activity weakened, reserves remained adequate to safeguard the peg and rising transport costs pushed inflation higher. On September 24, the committee raised the CBL Rate to 7.00% after the South African Reserve Bank increased its policy rate to 7.25%, citing increased upside risks to inflation and tighter regional and global financial conditions despite contained domestic inflation, weak demand and an external position adequate to support the peg, and judged the resulting 25-basis-point differential sufficient to sustain the peg and support domestic economic activity.