BY BUSINESS EDITOR
MBABANE – The central bank of Eswatini (CBE) kept its benchmark interest rate unchanged, which means that banks are expected to maintain the prime lending rate on loans extended to businesses at 11.0 per cent and the interest rate at 7.5 per cent.
The outcome was consistent with analyst and economist forecasts, which had changed in the previous few weeks to reflect the belief that the cycle of rate hikes has peaked and that CBE would now likely decrease rates.
The bank has kept the interest rate at 7.5% in accordance with the Monetary Policy Consultative Committee (MPCC), according to CBE Governor Dr. Phil Mnisi. According to the governor, banks were therefore required to hold the prime lending rate on loans made to individuals and businesses at 11.0 percent until the next monetary policy meeting in order to keep interest rates stable.
According to Dr. Mnisi, the CBE anticipates a modest increase in the price of goods and services in 2023. He pointed out that the bank had lowered its inflation projection to 4.93 percent for 2023 and 4.68 percent for 2024.
He said that supply chain disruptions, unstable oil prices, and the potential for drier weather, which would have an impact on food production, remain the main threats to Eswatini’s inflation outlook. Mnisi stated that the prospects for global economy are still being negatively impacted by tighter monetary policy.
He stated that whereas emerging markets and developing economies are predicted to grow by 4.0 percent in 2023 and 4.1 percent in 2024, advanced economies are predicted to grow by 1.5% in 2023 and 1.4% in 2024.
The governor also mentioned that the ratio of non-performing loans (NPLs) was 7.3% at the time. According to him, a further goal of maintaining stable interest rates is to relieve consumer pressure, particularly with regard to lending.
Mnisi continued, saying that this had already resulted in a favourable uptake of financing and that they hoped it would help ease the burden of loan repayment. He claimed that the fact that customers were already in a precarious situation might be the reason why the NPL ratio remained high.
