Lesotho’s central bank, which pegs its currency to South Africa’s rand, held its key interest rate at 7.75%, diverging from South Africa’s monetary policy for the first time this year. While the exchange rate remains an inflation risk, inflation is forecast to average 5.5% in 2025 and 5% in 2026. Economic growth was modest in July but is expected to improve, while net international reserves have been reduced to USD 750 mln, sufficient to maintain the currency peg.