Maseru, May 29 — The Governor of the Central Bank of Lesotho (CBL) Dr. Maluke Letete said that rising global tensions and increasing fuel prices continue to pose serious risks to Lesotho’s economy, forcing the Monetary Policy Committee (MPC) to take precautionary measures aimed at protecting price stability and safeguarding the country’s external reserves.
Addressing the media following the MPC meeting, Dr. Letete announced that the Committee had decided to increase the Central Bank Rate (CBR) by 25 basis points from 6.50 percent to 6.75 percent.
He explained that the decision was informed by growing global economic uncertainty, particularly the ongoing conflict in the Middle East, which has disrupted global energy markets and caused sharp increases in crude oil prices.
“The global economy remains highly uncertain, with geopolitical tensions continuing to weigh heavily on economic performance across the world,” said Dr. Letete.
He noted that disruptions in international shipping routes and energy supply chains have already contributed to rising transport and commodity costs globally, placing pressure on inflation, especially in low-income and commodity-importing countries such as Lesotho.
Dr. Letete further indicated that the International Monetary Fund (IMF) recently revised downward global economic growth projections to 3.1 percent for 2026, while inflation expectations were revised upward due to increasing energy and food prices.
On the domestic front, he said Lesotho’s inflation rose to 3.1 percent in April 2026, mainly driven by higher fuel and transportation costs resulting from global oil price shocks.
“The medium-term inflation outlook has therefore been revised upwards, with inflation projected to rise to 4.8 percent in June 2026 and further to 5 percent in June 2027 before easing,” he said.
Despite these challenges, Dr. Letete emphasized that Lesotho’s external position remains stable and resilient.
He revealed that the country’s Net International Reserves stood at approximately US$1.2 billion as of May 19, 2026, exceeding the minimum target by over US$200 million.
“This strong reserve position provides an important buffer against external shocks and helps maintain confidence in the exchange rate arrangement,” he added.
Dr. Letete also acknowledged that domestic economic activity remains subdued, although some modest growth has been observed in transport-related sectors and other service industries.
He indicated that the MPC carefully balanced the need to contain inflation while at the same time supporting economic recovery and protecting jobs.
“The increase in the policy rate is modest but necessary to maintain macroeconomic stability and anchor inflation expectations,” he said.
Dr. Letete warned that risks to the inflation outlook remain elevated, including possible exchange rate depreciation, imported cost pressures and the potential reinstatement of fuel levies.
He assured the nation that the Central Bank will continue to closely monitor global and domestic developments and stands ready to take further action if necessary.
“Our future policy decisions will remain data-driven and focused on preserving economic stability while supporting sustainable growth,” concluded Dr. Letete.
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