Reserve Bank of Malawi (RBM) last evening maintained the policy rate at 24 percent to support ongoing efforts to stabilise prices and safeguard macroeconomic stability.
In a Monetary Policy Committee (MPC) statement following its second meeting of 2026 held on April 29 and April 30, RBM Governor George Partridge, who chairs the MPC, said the decision reflects a cautious approach to consolidating recent gains in inflation reduction.
To complement the decision on the policy rate, the MPC also increased the liquidity reserve requirement (LRR) for local currency deposits to 12 percent from 10 percent, a decision the central bank said would help reduce excess liquidity in the banking system that continues to fuel inflationary pressures.
Reads the statement in part: “The MPC noted that earlier monetary policy actions have contributed to the observed decline in inflation. However, rising non-food inflation, elevated money supply growth, and excess liquidity conditions require continued attention.
consolidating recent gains. | Nation
“Maintaining the Policy Rate at its current level will support the ongoing disinflation process and anchor inflation expectations. In addition, the increase in the LRR ratio on local currency deposits is expected to absorb excess liquidity in the banking system, further moderate money supply growth, and strengthen monetary policy transmission.”
RBM data show that headline inflation declined to 24.3 percent in the first quarter of 2026, from 27.7 percent in the fourth quarter of 2025, mainly driven by lower food inflation, reflect ed in improved food supply conditions.
However, non-food inflation increased during the quarter, reflecting higher fuel prices and rising import-related costs.
Despite the improvement, the MPC said risks to the inflation outlook remain, including global supply chain disruptions, rising commodity prices and domestic liquidity pressures.
In a brief interview yesterday, economist Velli Nyirongo said the decision was “largely” expected, observing that with inflation still high, keeping the policy rate unchanged signals caution rather than tightening too aggressively, which could hurt growth.
RBM in March this year eased the policy rate by 200 basis points to 24 percent , the first time since raising the policy rate to 26 percent in January 2024.
In recent months, commercial banks have been reducing their lending rates following policy rate adjustment, a development analysts argued is not significant enough to transform the investment climate.
Cumulatively, commercial banks have cut lending rates since February from 25.2 percent to 24.7 percent before dropping twice in March to 23.7 percent and 22.4 percent after the RBM cut policy rate from 26 percent to 24 percent.
Banks typically add a premium of nine to 10 percentage points above their base lending rates depending on borrower risk and loan administration costs. Lending rates currently average about 31 percent.
