The Monetary Policy Committee (MPC) of the Central Bank of Lesotho (CBL) held extraordinary meeting on Monday, to consider international, regional and domestic economic developments and financial markets’ conditions in light of the unfolding global socio-economic crisis, triggered by the outbreak of the coronavirus disease, also known as COVID-19.

The MPC chairperson who is also the Governor of Central Bank of Lesotho Dr. Ret’selisitsoe Matlanyane, said the global spread of coronavirus has raised concerns across the world, and heightened economic uncertainty, and the uncertainty brought about by the outbreak of COVID-19, has put global economic activity at risk.

She said advanced economies including the United States (US) and the European Union (EU), are likely to contract in short to medium term, owing to a decline in trade and weak economic activity, in industries such as air travel, hotels and restaurants.

In her remarks she indicated that governments around the world, have introduced travel bans in an effort to contain the spread of the virus, and travel industry has been severely affected, with airlines cutting flights and tourists cancelling business trips and holidays.

In her report she further said in South Africa, economic growth is expected to decline by 0.2% in 2020, against the earlier projection of 1.2%.

She continued to reveal that financial markets globally were characterized by heightened volatility and general risk off behavior as measured by the global financial stress index.

Yields in advanced economies declined whereas those of the emerging market economies, particularly in South Africa increased and that this is likely to result in exchange rate depreciation.

She however indicated that in response to these developments, measure central banks have taken measures to support their economies by cutting interest rate and locally the MPC decided to increase the NIR target floor from US$630 million to US$660 million and reduce the CBL rate by 100 basis points from 6.25% to 5.25% per annum.