ANTICIPATION HIGH AS CBE SETS POLICY DECISION

MBABANE – The spotlight is on the Central Bank of Eswatini (CBE) as it prepares to deliver its Monetary Policy Statement this coming Friday.

The monetary decision comes at a critical time amid growing economic pressures both globally and locally.

Following the last Monetary Policy Statement, where CBE Governor Dr Phil Mnisi outlined key economic developments and policy measures, this week’s announcement is expected to be closely watched by businesses, investors and consumers alike.

With rising inflation, increasing commodity prices and geopolitical tensions affecting global markets, the CBE’s stance on interest rates and overall monetary policy will be a key determinant of Eswatini’s economic outlook.

Currently, the interest rate is 7.0 per cent.

The upcoming policy decision comes against the backdrop of major economic shifts in the global landscape, including:
The Donald Trump administration’s decision to cut funding to certain African countries, including Eswatini, has raised concerns about the impact on development financing.

Supply

Meanwhile, South Africa’s diplomatic tensions with the US, coupled with possible trade policy shifts, could have indirect effects on Eswatini due to its economic reliance on SA.

Furthermore, Eswatini’s economy is already feeling the effects of global financial turbulence, but domestic challenges remain just as pressing. Rising global fuel and food prices, coupled with supply chain disruptions, have driven up the cost of living.

Another economic issue is that South Africa’s National Energy Regulator (NERSA) approved electricity tariff increases, which will also impact Eswatini given its reliance on Eskom’s power supply. Eswatini itself has approved local tariff hikes, further straining households and businesses.

Meanwhile, South Africa is considering a 0.5 per cent VAT hike, a move that could push up prices of imported goods into Eswatini and add to inflationary pressures.

Amid these challenges, Economist Sanele Sibiya has previously stated that the CBE is expected to keep interest rates unchanged, arguing that an increase could further slow economic activity at a time when consumers and businesses are already under financial strain.

“The central bank is likely to maintain the current interest rate given the delicate balance between inflation control and economic growth. Any hike could put pressure on borrowing costs, impacting both businesses and individuals,” Sibiya said in a previous interview.

He further noted that while keeping rates unchanged could support economic stability, inflationary pressures remain a major concern.

“The real challenge is that external factors, such as rising global commodity prices and geopolitical tensions, continue to drive inflation. This puts the central bank in a tough position, as they must weigh the risk of inflation against the need to keep the economy moving,” he added.

Given these economic developments, the CBE’s Monetary Policy Consultative Committee (MPCC) faces tough decisions on whether to adjust interest rates, maintain the current stance or introduce new policy measures to stabilise inflation and economic growth.

Growth

With many businesses and households feeling the squeeze of rising costs, analysts expect the CBE to strike a balance between inflation control and economic support.

A rate hike could help curb inflation, but it may also slow down economic growth. On the other hand, maintaining current rates may provide short-term relief but could risk long-term financial stability.

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