CBL re­vises mon­e­tary pol­icy rate

Lesotho Times - - Business - Retha­bile Pitso

THE Cen­tral Bank of Le­sotho (CBL) has re­vised its CBL rate from 6.25 per­cent to 6.75 per­cent in re­sponse to the de­pre­ci­a­tion of the rand against ma­jor cur­ren­cies.

Ad­dress­ing a news con­fer­ence on Tues­day, CBL Gov­er­nor Dr Retšelisit­soe Mat­lanyane said the apex bank’s Mon­e­tary Pol­icy Com­mit­tee (MPC) made the ad­just­ment af­ter con­sid­er­ing global eco­nomic de­vel­op­ments, fi­nan­cial mar­kets, do­mes­tic eco­nomic con­di­tions and out­look, as well as Net In­ter­na­tional Re­serves (NIR) de­vel­op­ments.

On the re­gional front, she said eco­nomic ac­tiv­ity re­mained sub­dued in 2015.

“In SA, eco­nomic ac­tiv­ity slowed down due to do­mes­tic sup­ply con­straints cou­pled with weak ex­port de­mand as well as height­ened risk in in­vestor con­fi­dence,” Dr Mat­lanyane said.

She said the mon­e­tary pol­icy stance tight­ened in the Com­mon Mon­e­tary Area (CMA) re­gion in re­sponse to the de­te­ri­o­rat­ing in­fla­tion out­look. The CMA links South Africa, Namibia, Le­sotho and Swazi­land into a mon­e­tary union.

Dr Mat­lanyane said ad­vanced economies and emerg­ing mar­kets economies had opted to leave their key rates un­changed while China cut its pol­icy rate in re­sponse to low in­fla- tion rates and weak eco­nomic ac­tiv­ity.

She noted that do­mes­tic out­put growth slowed down in 2015, with gross do­mes­tic prod­uct (GDP) only in­creas­ing by 2.8 per­cent in 2015 com­pared to 3.6 per­cent in 2014.

“The pri­mary sec­tor is pro­jected to have de­clined by 3.8 per­cent, while the sec­ondary sec­tor is ex­pected to reg­is­ter a growth rate of 3.9 per­cent. The ser­vice sec­tor is pro­jected to grow at 4.1 per­cent,” the CBL chief said.

“Do­mes­tic in­fla­tion­ary pres­sures in­creased, with the year-on-year con­sumer in­fla­tion rate ris­ing from 3.8 per­cent in Septem­ber to 5.1 per­cent in De­cem­ber 2015.

“In terms of the out­look, in­fla­tion is ex­pected to con­tinue on an up­ward tra­jec­tory in 2016.”

Dr Mat­lanyane said the drought con­di­tions af­fect­ing the SADC re­gion and the de­pre­ci­at­ing ex­change rate were also ex­pected to ex­ert pres­sure on food prices.

She also touched on money sup­ply, say­ing it ex­panded by 0.1 per­cent dur­ing the fourth quar­ter.

“This was at­trib­ut­able to a de­cline in do­mes­tic claims and a slow growth in Net For­eign As­sets. Money mar­ket in­ter­est rates re­mained broadly aligned to their re­gional coun­ter­parts,” said Dr Mat­lanyane.

“Hav­ing con­sid­ered the above eco­nomic de­vel­op­ments in­clud­ing those in the ex­ter­nal sec­tor and govern­ment bud­getary op­er­a­tions, the MPC de­cided that the NIR po­si­tion con­tin­ues to re­main strongly above the pre­vi­ously set tar­get floor of US$635 mil­lion.

“How­ever, due to cur­rency de­pre­ci­a­tion of the Loti against ma­jor cur­ren­cies in the fourth quar­ter, the par­ity be­tween the Loti and the Rand can be ad­e­quately un­der­writ­ten with the NIR floor of US$600.00 mil­lion.”

CBL Gov­er­nor Dr Retšelisit­soe Mat­lanyane.

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