The Reserve Bank of Malawi (RBM) has for the second time resolved to maintain the bank rate at 25 percent barely three months after the central bank hiked the policy rate from 21 percent in December.
This means that commercial banks in the country’s financial system will continue to borrow money from RBM at 25 percent to patch up their liquidity levels for lending out to their respective clientele.
The decision by RBM to maintain the indicative cost of borrowing follows the central bank’s Monetary Policy Committee (MPC)-chaired by the central bank governor Charles Chuka-which convened on Tuesday, 12th March 2013 to review recent economic developments.
“Based on regular economic and monetary analyses, the MPC decided to keep the policy rate and the Liquidity Reserve Requirement (LRR) unchanged at 25.0 percent and 15.5 percent, respectively,” reads the latest minutes of the second MPC for the year 2013, seen by Nation Online on Wednesday.
Every commercial bank is obligated to hold minimum reserves of its customer deposits, normally inform of cash which is physically stored at the central bank and is called LRR.
RBM raised the base rate by 19 percent to 25 percent on 3rd December, 2012, seemingly in an attempt to stabilize the Kwacha and contain high inflation.
Read the MPC Minutes minutes by downloading a PDF file here: http://www.rbm.mw/documents/mpc/120132013_2mpc.pdf
