- Decision
- Maintain
- Rate change
- 0 bps
- Policy rate after decision
- 6.75%
The Central Bank of Lesotho’s Monetary Policy Committee held the CBL Rate at 6.75% per annum on July 24 amid weaker domestic activity and a marginal upward revision to the medium-term inflation outlook, with risks tilted to the upside. Over the past year, the central bank cut the rate by 25 basis points to 6.75% in August 2025 and to 6.50% in November, held it through March 2026, then raised it by 25 basis points in May. Domestic inflation edged higher on rising transport costs while food price pressures remained contained, growth is expected to remain modest and supported mainly by services, and private-sector credit growth remained subdued. Net international reserves stood at USD1.353 billion on July 16, providing 5.4 months of import cover and an adequate buffer for the exchange-rate peg, but are projected to moderate to USD1.217 billion by March 2027 as higher oil costs increase the import bill. Globally, Middle East supply disruptions have driven energy prices sharply higher, while risks from escalating conflict, trade fragmentation and a strong El Niño cloud the growth and inflation outlook. The committee will monitor second-round effects and stands ready to act decisively to safeguard the peg and preserve macroeconomic stability.
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.