The Monetary Policy Committee (MPC) of the Central Bank of Lesotho (CBL) held its policy rate at 6.50% per annum, citing contained inflation and strong reserve buffers while warning that the global oil shock could intensify price pressures and that the domestic economy remains below potential. Over the past year, the CBL held the rate at 7.25% in March 2025, cut it by 25 basis points to 6.75% in August and by a further 25 basis points to 6.50% in November, then held it in January 2026. The MPC maintained a modest negative differential of 0-50 basis points against the South African Reserve Bank repo rate to sustain the exchange-rate peg and support economic activity. Headline inflation eased to 2.7% in February, although the medium-term outlook was revised higher, while the Composite Indicator of Economic Activity recorded modest growth in January and private-sector credit continued to expand. Net International Reserves stood at USD 1.125 billion on March 18, above the minimum threshold and sufficient for 4.3 months of imports. The Middle East conflict and closure of the Strait of Hormuz drove crude oil prices sharply higher, shifting the global outlook toward rising stagflation risks. Future decisions will remain data-dependent, with the MPC monitoring energy prices, inflation, capital flows and the external position to safeguard reserves and macroeconomic stability.
2026-03-27Central Bank of Lesotho
Central Bank of Lesotho Holds Policy Rate at 6.50%
The Central Bank of Lesotho held its policy rate at 6.50%, citing contained inflation and strong reserve buffers, with net international reserves of USD 1.125 billion covering 4.3 months of imports. The Monetary Policy Committee warned that the global oil shock could intensify inflationary pressures and said future decisions will remain data-dependent.