- Decision
- Maintain
- Rate change
- 0 bps
- discount rate
- 6.75%
The Central Bank of Eswatini (CBE), acting with its Monetary Policy Consultative Committee, kept the discount rate steady at 6.75 percent on 19 September 2025, judging this level appropriate amid subdued global growth and a further moderation in domestic inflation. After a 25 bp cut in May, the rate has been unchanged through the August and September meetings. Commercial banks are instructed to hold the prime lending rate at 10.25 percent until the next review. Headline consumer inflation eased to 2.6 percent y/y in August, and the CBE trimmed its 2025 inflation projection to 3.24 percent, citing softer food prices, a stronger exchange rate and lower oil costs; GDP grew 3.0 percent in 2024 but contracted 0.3 percent y/y in 2025 Q1, while private-sector credit slipped 0.6 percent m/m in July and the non-performing loan ratio inched up to 7.2 percent. Gross official reserves were E12.2 billion, providing 3.0 months of import cover. The CBE highlighted continued global weakness, mixed advanced-economy inflation readings and recent 25 bp policy rate cuts by the United States and United Kingdom, and said it will keep monitoring developments to maintain 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.