- Decision
- Maintain
- Rate change
- 0 bps
- Discount rate
- 6.75%
The Central Bank of Eswatini (CBE) and its Monetary Policy Consultative Committee left the discount rate unchanged at 6.75 percent on 29 May 2026, citing a need to watch the inflation impact of the Middle-East conflict and the associated oil price shock amid weakening domestic fundamentals. After a 25 bp cut in May 2025 the rate has remained steady. Banks are expected to keep the prime lending rate at 10.25 percent until the next meeting. Headline inflation picked up to 2.0 percent in April and the CBE lifted its 2026 inflation forecast to 3.31 percent (from 3.27 percent), while real GDP growth eased to 5.7 percent y/y in Q4 2025. Private-sector credit expanded 0.9 percent m/m to E23.2 billion and the non-performing-loan ratio edged down to 6.8 percent. Foreign-exchange reserves stood at E8.8 billion, equal to 2.0 months of import cover, and public debt was 38.9 percent of GDP. Globally, the IMF cut its 2026 growth forecast to 3.1 percent and raised its inflation projection to 4.4 percent, while major central banks largely held policy rates steady. The CBE reiterated that risks to inflation remain high and pledged to continue monitoring international, regional and domestic conditions and to act appropriately to safeguard 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.