The Monetary Policy Committee of the Central Bank of Lesotho (CBL) raised the CBL rate by 25 basis points to 6.75% in May 2026, balancing an upwardly revised inflation outlook and external stability against subdued domestic activity. The provided decisions show the rate at 7.25% in March 2025, a 25-basis-point cut from 7.00% to 6.75% in August, a further 25-basis-point cut to 6.50% in November, and holds in January and March 2026. The new rate maintains a 25-basis-point negative differential to the South African Reserve Bank repo rate, which the committee considers sufficient to sustain the exchange-rate peg and support activity, while banks should cap prime lending rates at the CBL rate plus 350 basis points. Headline inflation rose to 3.1% in April, driven mainly by transport costs following the global energy shock, and is projected at 4.8% in 2026 and 5.0% in 2027. Economic activity remained subdued despite a modest early-2026 expansion in the Composite Indicator of Economic Activity, supported by domestic demand, recovering textile exports and financial services. Net International Reserves stood at USD1.227 billion on May 19, USD217 million above the target floor, leaving the peg well capitalised. Globally, the Middle East conflict, the near-closure of the Strait of Hormuz, higher oil and gold prices, and food and climate risks have weakened growth prospects and raised inflation pressures. Future decisions will remain data-dependent, and the committee stands ready to act
2026-05-29Central Bank of Lesotho
Central Bank of Lesotho Raises Policy Rate by 25 Basis Points to 6.75%
The Central Bank of Lesotho (CBL) raised the CBL rate by 25 basis points to 6.75% in May 2026 amid a higher inflation outlook and external stability risks. The rate maintains a 25-basis-point negative differential to the South African Reserve Bank repo rate, while net international reserves of USD1.227 billion remained USD217 million above the target floor.