The Monetary Policy (MPC) of the Central Bank of Lesotho (CBL) held its 23rd meeting on Tuesday this week.

Speaking during the virtual meeting, Central Bank of Lesotho Governor Dr. Ret’selisitsoe Matlanyane said since the 22nd MPC meeting in May this year, the outbreak of the coronavirus pandemic continued to devastate communities, and disrupt economic activities in many countries across the globe, more especially in major and developing economies.

She said while Lesotho was the last country to register confirmed cases on the continent, the number of infections is rising exponentially and threatening to put pressure on the healthcare system, adding that the indication is that the worst of the pandemic is still ahead.

In her statement, she pointed out that global economic activity remained under pressure in the face of growing risks, to the economic outlook that include the spread of the coronavirus as well as re-escalations of geo-political and trade tensions.

She said risks to the domestic economic outlook include the possible spread and the infection control measures of COVID-19, exposure to international economic developments, domestic structural rigidities, and policy uncertainty.

She further said having considered the Net International Reserve (NIR) developments and outlook, regional inflation and interest rate outlook, domestic economic conditions and the global economic outlook, the MPC decided to increase the NIR target floor, from US$530 million to US$550 million.

The NIR target remains consistent with the maintenance of the exchange rate peg, between the loti and the South African rand.

The MPC also decreased the CBL rate from 3.75 percent per annum to 3.50 percent per annum.

Dr. Matlanyane further stated that the rate set at this level, will ensure that the domestic cost of borrowing and lending remain aligned with the cost of funds elsewhere in the region.