Mbabane- Two central banks confronted by the same global inflation threats have reached different conclusions, with the Central Bank of Eswatini (CBE) opting to keep interest rates unchanged while the South African Reserve Bank (SARB) moved to tighten monetary policy amid mounting price pressures.
The Central Bank of Eswatini (CBE) on Friday left its discount rate unchanged at 6.75 percent, ensuring that commercial banks maintain the prime lending rate at 10.25 percent. The decision came just a day after the South African Reserve Bank (SARB) increased its repo rate by 25 basis points to 7 percent, pushing prime lending rates to 10.5 percent amid growing concerns over inflation.
The contrasting policy decisions reveal a widening divergence in how the two central banks are assessing inflation risks stemming largely from escalating tensions in the Middle East and the resulting surge in global oil prices.
Although both countries are experiencing rising inflation, the pressure is considerably more pronounced in South Africa. Inflation accelerated to 4 percent in April from 3.1 percent in March, prompting the SARB to revise its inflation outlook upward and tighten monetary conditions.
In Eswatini, inflation remains significantly lower at 2 percent, despite rising transport, fuel and housing costs. The CBE nevertheless acknowledged growing risks, revising its inflation forecast upward to 3.31 percent for 2026 from 3.27 percent previously.
“The Bank took a cautious approach and the need to monitor closely the impact of the ongoing Middle East crisis and oil price shock,” Governor Dr. Phil Mnisi said in the monetary policy statement.
The CBE’s decision was also supported by relatively strong domestic economic growth. Eswatini’s economy expanded by 5.7 percent year-on-year in the fourth quarter of 2025, outperforming South Africa, whose growth forecast for 2026 was downgraded to 1.2 percent.
Despite holding rates steady, the CBE signalled that risks remain elevated. Rising fuel costs, global uncertainty and regional inflationary pressures could eventually force policy adjustments should price increases intensify.
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