Africa-Press – Eswatini. Eswatini’s interest rate is expected to remain unchanged at 7.50 per cent and further cuts are anticipated from July this year.
This is the view of the local Economist Sanele Sibiya, who said despite these projections, inflation in Eswatini still faces upside risks. These risks include food price hikes, a weaker Rand and higher global prices.
Rates
Global inflation and interest rates are trending downward after hitting a peak in the latter months of 2023, and many anticipate the US Federal Reserve to be eying a move for lower rates within the first half of the new year. According to Sibiya, the Central Bank of Eswatini (CBE) is likely to follow suit, though with a lagged approach. “We are expecting the interest rate to start declining, probably from the second half of 2024. What we expect in the short medium term, is that it will stay right where it is now, while we keep an eye on other global signals,” said the economist.
Signs
Sibiya said the CBE could not rush into dropping the interest rate while signals across the globe had not yet shown any clear signs either going up or down. He said they were looking up to the US Federal Reserve to start discussing their interest rate. He said it was expected that at least around February or March the US Fed would start discussions. The economist stated that the country was likely to be affected by the ongoing conflicts in the Middle East and the Durban Port issues.
He said the Durban Port issues were likely to affect the country’s food prices, as it was affecting issues of transportation.He said, as economists, they were hoping that all these global challenges would improve, so that the shocks may not be severe. It is worth noting that the Eswatini’s interest rate in 2023 remained unchanged since July 2023, where it was kept at 7.50 per cent until the last CBE and the Monetary Policy Consultative Meeting (MPCC) in November 2023.
Inflation
In his latest monetary policy statement, the CBE Governor Dr Phil Mnisi said the bank continues to monitor international and domestic developments that influence the movements of inflation and will act appropriately in line with its mission, to foster price and financial stability that is conducive to the economic development of Eswatini.
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