- Decision
- Maintain
- Rate change
- 0 bps
- discount rate
- 6.75%
The Central Bank of Eswatini’s Monetary Policy Consultative Committee kept the discount rate at 6.75 % at its 1 August 2025 meeting, judging that subdued inflation and moderating domestic growth, together with the need to protect the lilangeni–rand peg and safeguard financial stability, justified a hold. The pause follows a single 25 bp cut in May after the rate had been unchanged at 7.00 % in January and March. No changes were announced to liquidity operations or other implementation parameters. Annual headline inflation eased to 2.9 % in June from 3.2 % in May, prompting the Bank to trim its 2025 average inflation forecast to 3.4 %, though it foresees a rise to 4.1 % in 2026; first-quarter GDP slipped 0.3 % y/y and full-year growth is now seen slowing to 3.4 % from 3.6 % in 2024, even as private-sector credit expanded 11.2 % y/y to E24.6 bn in June. Gross official reserves fell to E11.4 bn, covering 3.0 months of imports on 25 July, down from 3.6 months at end-June and 4.4 months last December. Against a backdrop of slightly firmer IMF global growth projections, easing global inflation and still-elevated international interest rates, the central bank pledged ongoing vigilance and said it stands ready to adjust policy to support growth while maintaining price and external 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.