business

Jan. 14, 2022

NEO SENOKO

2 min read

Standard Lesotho Bank increases Prime Lending Rate

Standard Lesotho Bank increases Prime Lending Rate

Standard Lesotho Bank Managing Director, Anton Nicolaisen

Story highlights

  • The bank says it ensured the domestic cost of borrowing is aligned with the rest of the region
  • Retail and corporates deposit interest rates remained unchanged after increase was introduced

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STANDARD Lesotho Bank has increased the Prime Lending Rate by 25 basis points to 8.50 percent after the Central Bank of Lesotho (CBL) also increased its interest rates from 3.50 percent per annum to 3.75 percent per annum.

It means that the Standard Lesotho Bank customers will be charged M8.50 per month on every M100 borrowed from the bank.   

At this rate, the commercial bank said it ensured that the domestic cost of borrowing was aligned with the rest of the region.

 “We initially indicated that the Prime Lending Rate would remain unchanged at 8.25 percent in December 2021, however, in accordance with the guidance that has been provided by the Central Bank of Lesotho, the bank has adjusted its Prime Lending Rate in line with the Monetary Policy Committee decision of the November 22, 2021 to increase the CBL rate by 25 basis points from 3.5 to 3.75 percent,” Standard Lesotho Bank said in a press statement.

The Prime Lending Rate is the rate of interest that commercial banks charge their clients when issuing a loan.

The Standard Lesotho Bank said however, that retail and corporates deposit interest rates remained unchanged after the increase was introduced on December 6, 2021.

The interest rate, however could increase again in the next quarter, with the International Monetary Fund (IMF), an organisation that works to foster global monetary cooperation warning emerging economies to gird for possible rough times.

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This, as the US Federal Reserve prepares to raise interest rates and world economic growth slows because of the Omicron variant of COVID-19.

Higher interest rates mean financing costs for some emerging economies with dollar denominated debt will rise.

South Africa is among the countries that will be forced to further increase the interest rate going forward, and as a result Lesotho will automatically follow suit.

According to the IMF, the risk will be a slowing of demand and trade in the United States, as well as capital flight and depreciation of the dollar in emerging markets.

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