EZULWINI – Central Bank of Eswatini Governor Dr Phil Mnisi has warned that rising inflation expectations have increased the likelihood of interest rates moving higher in the near to immediate term.
This is as global and domestic cost pressures continue to weigh on the economy.
Dr Mnisi said while monetary conditions in 2025 and the first four months of 2026 had generally remained favourable, the outlook had become increasingly uncertain following renewed geopolitical tensions in the Middle East, which were already disrupting global supply chains and fuelling inflationary pressures worldwide.
The governor delivered his annual monetary policy statement yesterday.
He said Eswatini’s inflation was expected to trend upwards in the near term, with higher global oil prices likely to push up local fuel costs, which would directly affect transport inflation and subsequently feed into food prices.
The governor noted that additional inflationary pressures could also arise from a weaker South African Rand, rising domestic electricity tariffs and other administered prices.
“In the short to medium term, the outlook for monetary policy remains highly uncertain largely due to the recent outbreak of the conflict in the Middle East, which is already disrupting global supply chains and contributing to elevated global inflationary pressures,” Mnisi said.
He said the changing global environment had reduced expectations of interest rate cuts in major economies, while increasing the probability of further rate hikes.
According to the governor, despite the growing risks, some of the upward inflationary pressures could be partially offset by improved agricultural output supported by favourable rainfall received during the review period.
The Central Bank maintained what Mnisi described as a ‘slightly accommodative to stable’ monetary policy stance between January 2025 and April 2026 as inflationary pressures steadily eased compared to the previous year.
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