The Central Bank of Lesotho’s Monetary Policy Committee held its 115th meeting this week, outlining its assessment of global and domestic conditions and policy decisions.
Since the 114th MPC meeting, the CBL announced that global growth projections have been maintained, signalling resilient economic prospects despite ongoing policy uncertainty.
The Governor of the CBL, Dr Maluke Letete, affirmed that the projections are attributed to front-loading of production and exports in anticipation of higher US tariffs and improved financial conditions due to a weaker US dollar.
However, he said risks persist due to geopolitical tensions, potential tariff increases and fiscal vulnerabilities in key economies.
“In the second quarter of 2025, economic growth remained generally stable across major economies, driven by a robust export performance, increased manufacturing activity and targeted fiscal stimulus measures particularly in China,” Dr Letete said.
He highlighted the South African economic growth that picked up in mid-2025, driven by a rebound in manufacturing and mining. However, inflation eased last month but is expected to rise due to administered price pressures.
As a result, the South African Reserve Bank has decided to keep its policy rate unchanged to maintain balanced growth support with inflation monitoring.
“Coming to Lesotho, the preliminary indicator of economic activity showed a slight growth in July 2025, reflecting expansion in transport and construction categories,” the Governor announced, adding that weak domestic demand and a fall in manufacturing, driven by lower US textile exports have nonetheless constrained growth.
But despite the constraints, Dr Letete said there is hope that medium-term growth is expected to moderate due to external shocks.
According to the CBL, inflation rose slightly to 4.6 percent in August 2025 due to rising food prices while July indicators revealed an overall fiscal balance improvement, shifting to a surplus of 11.4 percent of the GDP driven by SACU receipts.
Meanwhile, the public debt-to-GDP ratio increased to 56.0 percent in July 2025 from 55.8 percent in June 2025 due to project disbursements.”
Dr Letete continued to inform that the current account of the CBL recorded a deficit of 4.8 per cent of GDP in mid-2025 as a result of high import demand, and the Net International Reserves (NIR) remain above the target floor of US$840 million.
The Committee reviewed risks to growth and inflation alongside regional monetary policy conditions, underscoring the importance of maintaining the credibility of the loti-rand peg.
It therefore decided to maintain the NIR target floor at US$840 million and keep the CBL rate at 6.75 percent per annum.
The CBL is navigating a complex economic landscape with mixed signals.
While global growth prospects remain resilient, Lesotho faces challenges including weak domestic demand and external shocks.
The Committee’s decision to maintain the policy rate reflects a cautious approach, balancing the need to support growth with the importance of maintaining price stability and the credibility of the loti-rand peg.
The bank said it was committed to continuing to monitor domestic and external developments closely and is ready to take appropriate policy action if risks to the peg pr price stability escalate.
