The Central Bank of Eswatini (CBE) together with the Monetary Policy Consultative Committee (MPCC) have maintained the bank rate at 7.50%.
Announcing the decision, the Bank’s Governor Dr. Phil Mnisi disclosed that there are a cumulative of factors that led to their decision. Mnisi announced the decision during a press briefing held at the Governor’s boardroom.
“On the global front, the International Monetary Fund (IMF) marginally reviewed its growth forecast for 2023 to 3.0% from 2.8% forecasted in April, whilst the forecast for 2024 remains unchanged at 3%. Advanced economies are forecasted to grow by 1.5% in 2023, and 1.4% in 2024, whilst emerging markets & developing economies are expected to grow by 4.0% in 2023, and 4.1% in 2024.”
The Governor, however, stated that tighter monetary policy conditions continue to weigh down on global economic growth prospects.
On the regional front, there is also positive news as the South African Reserve Bank marginally revised its growth forecast from 0.4% in July to 0.7% for 2023, whilst the forecast for 2024 remains unchanged at 1%.
On the domestic front, levels of growth were also observed. “Locally, Gross Domestic Product (GDP) grew by 0.5% in 2022 compared to a 10.7% growth in 2021. On a quarterly basis, GDP grew by a slower 1.1% year on year in the first quarter of 2023, down from a revised growth of 6.7% in the fourth quarter of 2022.”
In terms of inflation which was another key consideration by the MPCC when taking its decision, global inflation is forecasted lower at 6.8% from 7% in 2023, whilst the forecast for 2024 was marginally revised up to 5.25% from 4.9%.
The SARB on the other hand revised its inflation forecast for 2023 to 5.9% from 6% in July. On the local front, the country’s headline consumer inflation decelerated to 4% from 4.5% in the previous month.
“The Bank revised down its inflation forecast to 4.93% for 2023 and 4.68% for 2024. Risks to inflation outlook for Eswatini include supply chain disruptions, oil prices uncertainty, and the possibility of drier weather which will affect food production.”
Despite the marginal growth forecasts and decelerating inflation forecasts the Bank is still concerned by the possibility of the expected El Nino drought and the Russia-Ukraine war which could intensify thereby leading prices to increase.
The decision by the MPCC to maintain the repo rate means that banks are expected to maintain prime lending rates on loans extended to individuals and businesses at 11.0% until the next monetary policy meeting.