- Decision
- Maintain
- Rate change
- 0 bps
- CBL rate
- 6.75%
The Monetary Policy Committee of the Central Bank of Lesotho kept the CBL rate steady at 6.75 % on 23 September 2025, judging the stance appropriate to support subdued domestic activity while safeguarding the loti–rand peg amid balanced near-term inflation risks. After easing the policy rate by a cumulative 50 bp this year—25 bp in February to 7.25 % and a further 25 bp in August to the current 6.75 %—the Committee also left the Net International Reserves (NIR) target floor unchanged at USD 840 m, which it views as sufficient to underwrite the exchange-rate arrangement. Annual headline inflation inched up to 4.6 % in August from 4.4 % in July, but is expected to moderate, while July’s preliminary activity indicator showed only marginal growth as weak domestic demand and softer textile manufacturing offset gains in transport and construction. The fiscal position swung to an 11.4 %-of-GDP surplus in July on higher SACU receipts, although public debt edged up to 56 % of GDP. The current-account moved to a 4.8 %-of-GDP deficit in June, yet NIR remain comfortably above the policy floor, supporting the peg. Globally, growth projections are stable thanks to front-loaded exports and easier financial conditions, but geopolitical tensions and tariff risks cloud the outlook. The Committee reiterated its readiness to act if pressures on the peg or price stability intensify.
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.