The country’s commercial banks have raised their lending rates by 10 percent since June this year to 22.7 percent in November, increasing the cost of money for businesses and households, data show.
Money market analysts say that with inflation easing but still elevated, the Reserve Bank of Malawi (RBM) is keeping monetary conditions tight, a stance that is reigniting concerns about the impact on investment and economic growth.
The analysts further say that higher reference rate, which serves as the base rate for loans and overdrafts, reflects recent tightening measures by the RBM aimed at containing inflationary pressures and anchoring market expectations.
In an interview, financial market dealer Leslie Fatchi said that the tighter liquidity environment has translated into higher funding costs among banks.
“This increase reflects the impact of the rise in the overnight interbank rate, which moved from an average of 12.19 percent in June 2026 to an average of 13.61 percent in July 2026,” he said.
Bankers Association of Malawi president Phillip Madinga said in an interview that lending rates will continue to reflect prevailing market conditions and monetary policy signals.
He said: “Banks remain committed to responsible lending and financial stability.
“Our priority is to transmit monetary policy efficiently while safeguarding asset quality.
Madinga, who is Standard Bank plc chief executive, said banks will continue to work with the RBM and government to support sustainable economic recovery.
But University of Malawi economics lecturer Edward Leman said an extended period of tight monetary policy risks undermining production and investment by making capital more expensive.
“The overall tightness of monetary policy raises the cost of borrowing and investment, which can suppress production and potentially prolong supply-driven inflation,” he said.
Leman argued that Malawi’s inflation is largely driven by supply-side constraints rather than excess demand, suggesting that expanding productive capacity can prove more effective than aggressive monetary tightening.
Malawi Union of Small and Medium Enterprises president James Chiutsi said the five-month rise in reference rates sends a clear signal that financing conditions are becoming increasingly restrictive.
“For small businesses, this has a direct impact. It is pushing up the cost of borrowing at a time many of them are already grappling with high operational costs, foreign exchange pressures and subdued demand,” he said.
Chiutsi warned that reduced access to affordable credit can slow business expansion, investment and job creation.
The applicable lending reference rate, which is also the base lending rate for banking loans and overdrafts, has been revised from 21.40 percent to 22.70 percent effective November 4.
The latest increase follows RBM’s decision to raise the Lombard rate, the interest rate commercial banks pay for short-term borrowing from the central bank, from 24.2 percent to 26 percent during its recent Monetary Policy Committee meeting.
During the meeting, the central bank maintained its policy rate at 24 percent, but widened the premium above the policy rate, effectively making emergency funding more expensive for lenders.
The increasing in reference rate marks a reversal from the downward trend seen earlier this year. After peaking at 25 percent at the end of 2025, reference rates had been on the decline. The country’s commercial banks have raised their lending rates by 10 percent since June this year to 22.7 percent in November, increasing the cost of money for businesses and households, data show.
Money market analysts say that with inflation easing but still elevated, the Reserve Bank of Malawi (RBM) is keeping monetary conditions tight, a stance that is reigniting concerns about the impact on investment and economic growth.
The analysts further say that higher reference rate, which serves as the base rate for loans and overdrafts, reflects recent tightening measures by the RBM aimed at containing inflationary pressures and anchoring market expectations.
In an interview, financial market dealer Leslie Fatchi said that the tighter liquidity environment has translated into higher funding costs among banks.
“This increase reflects the impact of the rise in the overnight interbank rate, which moved from an average of 12.19 percent in June 2026 to an average of 13.61 percent in July 2026,” he said.
Bankers Association of Malawi president Phillip Madinga said in an interview that lending rates will continue to reflect prevailing market conditions and monetary policy signals.
He said: “Banks remain committed to responsible lending and financial stability.
“Our priority is to transmit monetary policy efficiently while safeguarding asset quality.
Madinga, who is Standard Bank plc chief executive, said banks will continue to work with the RBM and government to support sustainable economic recovery.
But University of Malawi economics lecturer Edward Leman said an extended period of tight monetary policy risks undermining production and investment by making capital more expensive.
“The overall tightness of monetary policy raises the cost of borrowing and investment, which can suppress production and potentially prolong supply-driven inflation,” he said.
Leman argued that Malawi’s inflation is largely driven by supply-side constraints rather than excess demand, suggesting that expanding productive capacity can prove more effective than aggressive monetary tightening.
Malawi Union of Small and Medium Enterprises president James Chiutsi said the five-month rise in reference rates sends a clear signal that financing conditions are becoming increasingly restrictive.
“For small businesses, this has a direct impact. It is pushing up the cost of borrowing at a time many of them are already grappling with high operational costs, foreign exchange pressures and subdued demand,” he said.
Chiutsi warned that reduced access to affordable credit can slow business expansion, investment and job creation.
The applicable lending reference rate, which is also the base lending rate for banking loans and overdrafts, has been revised from 21.40 percent to 22.70 percent effective November 4.
The latest increase follows RBM’s decision to raise the Lombard rate, the interest rate commercial banks pay for short-term borrowing from the central bank, from 24.2 percent to 26 percent during its recent Monetary Policy Committee meeting.
During the meeting, the central bank maintained its policy rate at 24 percent, but widened the premium above the policy rate, effectively making emergency funding more expensive for lenders.
The increasing in reference rate marks a reversal from the downward trend seen earlier this year. After peaking at 25 percent at the end of 2025, reference rates had been on the decline. The country’s commercial banks have raised their lending rates by 10 percent since June this year to 22.7 percent in November, increasing the cost of money for businesses and households, data show.
Money market analysts say that with inflation easing but still elevated, the Reserve Bank of Malawi (RBM) is keeping monetary conditions tight, a stance that is reigniting concerns about the impact on investment and economic growth.
The analysts further say that higher reference rate, which serves as the base rate for loans and overdrafts, reflects recent tightening measures by the RBM aimed at containing inflationary pressures and anchoring market expectations.
In an interview, financial market dealer Leslie Fatchi said that the tighter liquidity environment has translated into higher funding costs among banks.
“This increase reflects the impact of the rise in the overnight interbank rate, which moved from an average of 12.19 percent in June 2026 to an average of 13.61 percent in July 2026,” he said.
Bankers Association of Malawi president Phillip Madinga said in an interview that lending rates will continue to reflect prevailing market conditions and monetary policy signals.
He said: “Banks remain committed to responsible lending and financial stability.
“Our priority is to transmit monetary policy efficiently while safeguarding asset quality.
Madinga, who is Standard Bank plc chief executive, said banks will continue to work with the RBM and government to support sustainable economic recovery.
But University of Malawi economics lecturer Edward Leman said an extended period of tight monetary policy risks undermining production and investment by making capital more expensive.
“The overall tightness of monetary policy raises the cost of borrowing and investment, which can suppress production and potentially prolong supply-driven inflation,” he said.
Leman argued that Malawi’s inflation is largely driven by supply-side constraints rather than excess demand, suggesting that expanding productive capacity can prove more effective than aggressive monetary tightening.
Malawi Union of Small and Medium Enterprises president James Chiutsi said the five-month rise in reference rates sends a clear signal that financing conditions are becoming increasingly restrictive.
“For small businesses, this has a direct impact. It is pushing up the cost of borrowing at a time many of them are already grappling with high operational costs, foreign exchange pressures and subdued demand,” he said.
Chiutsi warned that reduced access to affordable credit can slow business expansion, investment and job creation.
The applicable lending reference rate, which is also the base lending rate for banking loans and overdrafts, has been revised from 21.40 percent to 22.70 percent effective November 4.
The latest increase follows RBM’s decision to raise the Lombard rate, the interest rate commercial banks pay for short-term borrowing from the central bank, from 24.2 percent to 26 percent during its recent Monetary Policy Committee meeting.
During the meeting, the central bank maintained its policy rate at 24 percent, but widened the premium above the policy rate, effectively making emergency funding more expensive for lenders.
The increasing in reference rate marks a reversal from the downward trend seen earlier this year. After peaking at 25 percent at the end of 2025, reference rates had been on the decline. The country’s commercial banks have raised their lending rates by 10 percent since June this year to 22.7 percent in November, increasing the cost of money for businesses and households, data show.
Money market analysts say that with inflation easing but still elevated, the Reserve Bank of Malawi (RBM) is keeping monetary conditions tight, a stance that is reigniting concerns about the impact on investment and economic growth.
The analysts further say that higher reference rate, which serves as the base rate for loans and overdrafts, reflects recent tightening measures by the RBM aimed at containing inflationary pressures and anchoring market expectations.
In an interview, financial market dealer Leslie Fatchi said that the tighter liquidity environment has translated into higher funding costs among banks.
“This increase reflects the impact of the rise in the overnight interbank rate, which moved from an average of 12.19 percent in June 2026 to an average of 13.61 percent in July 2026,” he said.
Bankers Association of Malawi president Phillip Madinga said in an interview that lending rates will continue to reflect prevailing market conditions and monetary policy signals.
He said: “Banks remain committed to responsible lending and financial stability.
“Our priority is to transmit monetary policy efficiently while safeguarding asset quality.
Madinga, who is Standard Bank plc chief executive, said banks will continue to work with the RBM and government to support sustainable economic recovery.
But University of Malawi economics lecturer Edward Leman said an extended period of tight monetary policy risks undermining production and investment by making capital more expensive.
“The overall tightness of monetary policy raises the cost of borrowing and investment, which can suppress production and potentially prolong supply-driven inflation,” he said.
Leman argued that Malawi’s inflation is largely driven by supply-side constraints rather than excess demand, suggesting that expanding productive capacity can prove more effective than aggressive monetary tightening.
Malawi Union of Small and Medium Enterprises president James Chiutsi said the five-month rise in reference rates sends a clear signal that financing conditions are becoming increasingly restrictive.
“For small businesses, this has a direct impact. It is pushing up the cost of borrowing at a time many of them are already grappling with high operational costs, foreign exchange pressures and subdued demand,” he said.
Chiutsi warned that reduced access to affordable credit can slow business expansion, investment and job creation.
The applicable lending reference rate, which is also the base lending rate for banking loans and overdrafts, has been revised from 21.40 percent to 22.70 percent effective November 4.
The latest increase follows RBM’s decision to raise the Lombard rate, the interest rate commercial banks pay for short-term borrowing from the central bank, from 24.2 percent to 26 percent during its recent Monetary Policy Committee meeting.
During the meeting, the central bank maintained its policy rate at 24 percent, but widened the premium above the policy rate, effectively making emergency funding more expensive for lenders.
The increasing in reference rate marks a reversal from the downward trend seen earlier this year. After peaking at 25 percent at the end of 2025, reference rates had been on the decline. The country’s commercial banks have raised their lending rates by 10 percent since June this year to 22.7 percent in November, increasing the cost of money for businesses and households, data show.
Money market analysts say that with inflation easing but still elevated, the Reserve Bank of Malawi (RBM) is keeping monetary conditions tight, a stance that is reigniting concerns about the impact on investment and economic growth.
The analysts further say that higher reference rate, which serves as the base rate for loans and overdrafts, reflects recent tightening measures by the RBM aimed at containing inflationary pressures and anchoring market expectations.
In an interview, financial market dealer Leslie Fatchi said that the tighter liquidity environment has translated into higher funding costs among banks.
“This increase reflects the impact of the rise in the overnight interbank rate, which moved from an average of 12.19 percent in June 2026 to an average of 13.61 percent in July 2026,” he said.
Bankers Association of Malawi president Phillip Madinga said in an interview that lending rates will continue to reflect prevailing market conditions and monetary policy signals.
He said: “Banks remain committed to responsible lending and financial stability.
“Our priority is to transmit monetary policy efficiently while safeguarding asset quality.
Madinga, who is Standard Bank plc chief executive, said banks will continue to work with the RBM and government to support sustainable economic recovery.
But University of Malawi economics lecturer Edward Leman said an extended period of tight monetary policy risks undermining production and investment by making capital more expensive.
“The overall tightness of monetary policy raises the cost of borrowing and investment, which can suppress production and potentially prolong supply-driven inflation,” he said.
Leman argued that Malawi’s inflation is largely driven by supply-side constraints rather than excess demand, suggesting that expanding productive capacity can prove more effective than aggressive monetary tightening.
Malawi Union of Small and Medium Enterprises president James Chiutsi said the five-month rise in reference rates sends a clear signal that financing conditions are becoming increasingly restrictive.
“For small businesses, this has a direct impact. It is pushing up the cost of borrowing at a time many of them are already grappling with high operational costs, foreign exchange pressures and subdued demand,” he said.
Chiutsi warned that reduced access to affordable credit can slow business expansion, investment and job creation.
The applicable lending reference rate, which is also the base lending rate for banking loans and overdrafts, has been revised from 21.40 percent to 22.70 percent effective November 4.
The latest increase follows RBM’s decision to raise the Lombard rate, the interest rate commercial banks pay for short-term borrowing from the central bank, from 24.2 percent to 26 percent during its recent Monetary Policy Committee meeting.
During the meeting, the central bank maintained its policy rate at 24 percent, but widened the premium above the policy rate, effectively making emergency funding more expensive for lenders.
The increasing in reference rate marks a reversal from the downward trend seen earlier this year. After peaking at 25 percent at the end of 2025, reference rates had been on the decline.
