- Decision
- Raise
- Rate change
- 25 bps
- Discount rate
- 7%
The Central Bank of Eswatini raised the discount rate by 25 basis points to 7.00%, effective 26 September 2026, after considering global, regional and domestic conditions and its price and financial stability mandate, even as it lowered its 2026 inflation forecast. It had held the rate at 6.75% at every decision from November 2025 through July 2026. Banks are expected to increase their prime lending rate to 10.50%. The central bank projected inflation at 2.52% in 2026, reflecting lower-than-expected recent outcomes, slower food-price increases and more favourable exchange-rate movements, but said risks remained elevated due to the Middle East impasse and a potential El Niño drought. It projected economic growth of 5.3% in 2026, while private-sector credit continued to expand year on year and the non-performing loan ratio declined. Foreign exchange reserves provided 2.6 months of import cover. Globally, activity remained subdued but resilient, while energy-driven inflation pressures intensified following Middle East oil-supply disruptions. The central bank said it would continue monitoring international, regional and domestic developments and act appropriately to foster 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.