Lesotho’s Central Bank has lowered the repo rate to 6.5%, extending a gradual easing cycle that began in late 2024 as policymakers look to support borrowing, stabilize the local economy, and maintain alignment with regional monetary trends.
Announcing the decision after the Monetary Policy Committee’s (MPC) 116th meeting, Governor Dr Maluke Letete said the 25-basis-point cut reflects current domestic conditions and broader movements across Southern Africa. The repo rate, what the central bank charges commercial banks, directly influences the cost of mortgages, personal loans and vehicle finance. A reduction generally translates into lower borrowing costs for households and businesses.
The MPC also adjusted the Net International Reserves (NIR) target floor from US$830 million to US$840 million, a move aimed at preserving the one-to-one peg between the loti and the South African rand.
A continuation of monetary easing
Lesotho kept the repo rate at 7.75% from mid-2023 until November 2024 before beginning a series of cuts:
7.50% (Nov 2024)
7.25% (Feb 2025)
7.00% (June 2025)
6.75% (Sept 2025)
Now 6.50% (Nov 2025)
The central bank maintains that easing is necessary as global economic conditions remain fragile.
Global outlook remains mixed
According to the CBL, the IMF projects slower global growth in 2025. Inflation has eased across major advanced economies but remains elevated in certain regions. Risk factors include trade tensions, labour supply shocks, financial vulnerabilities, and rising commodity prices.
Advanced economies have shown pockets of resilience supported by domestic demand and technology investment, while select emerging markets continue to drive overall global expansion.
Regional and domestic dynamics
South Africa’s economy grew modestly in Q3 2025, driven largely by household consumption. With inflation at 3.6% in October and the rand strengthening, the South African Reserve Bank also cut its policy rate to 6.75%, reinforcing the region’s broader easing trend.
Domestically, Lesotho’s economic activity slowed in Q3 2025 due to weak manufacturing and subdued private demand. Growth is expected to remain modest over the medium term, limited by weaker exports and reduced mining output, though stronger textile exports to South Africa could offer some support.
Inflation in Lesotho fell to 4.5% in October, down from 4.7% in September, largely because of improved vegetable supply, lower fuel prices and a stronger rand.
Fiscal and external position
Lesotho posted a fiscal surplus of 10% of GDP, helped by water royalties and infrastructure projects. Public debt has been declining, and the current account deficit has eased on stronger exports. SACU receipts and overseas investment income remain essential buffers.
Net International Reserves increased by US$60.78 million between September and mid-November 2025, placing reserves above the revised NIR target floor.
The CBL said its latest decision reflects an assessment of growth risks, inflation pressures and the need to safeguard the credibility of the loti–rand peg.
