Delivering the MPC statement on Tuesday, the governor of CBL Dr Retšelisitsoe Matlanyane revealed that private sector credit extended by banks fell by 0.7 percent in February, after contracting by 0.2 percent in January.
She said the total credit granted to households also fell by 0.6 percent in February, relative to a decline of 0.5 percent in January.
On the other hand, the broad measure of money supply (M2) increased by 2.3 percent in February, from a decline of 3.3 percent in December last year, she said.
The increase was supported by a 24.1 percent growth in total banking sector net domestic assets, which was moderated by a five percent decline in the sector’s net foreign assets.
The MPC having considered all relevant aspects, decided to maintain the CBL rate at 3.50 percent per annum, while further increasing the Net International Reserve (NIR) target floor from US$ 670 million to US$720 million.
The NIR target remains consistent with the maintenance of the exchange rate peg between the loti and the South African rand.
“Set at this level, the CBL rate will ensure that the domestic cost of funds remains aligned with the rest of the region,” Dr Matlanyane also said.
The CBL’s Monthly Indicator of Economic Activity (MIEA) reflects that economic activity declined by 5.5 percent in January, relative to a 4.6 percent growth in December last year.
“This was mainly as the result of the reintroduction of COVID-19 induced restrictions in the review month,” the governor further showed.
