Reserve Bank of Malawi (RBM) has maintained the policy rate at 26 percent as it forecasts inflation to average 27 percent this year.
The decision was made at a Monetary Policy Committee (MPC) meeting yesterday where the Liquidity Reserve Requirement ratios were also maintained at 10 percent and 3.75 percent for local currency and foreign currency deposits, respectively.
In a report after the meeting yesterday, signed by RBM Governor McDonald Mafuta Mwale, who also sits as MPC chairperson, the central bank attributed the decision to observations that although inflation pressure has moderated, low agricultural production remains a significant risk to inflation.
Reads the report in part: “In arriving at this decision, the Committee noted that inflationary pressures have moderated. However, risks remain, including those stemming from low agricultural output and fiscal imbalances.
“The MPC reaffirmed its earlier position that the current monetary policy stance is sufficiently tight to steer inflation downwards toward the medium-term objective, supported by targeted supply-side interventions and fiscal consolidation.”
The bank is also forecasting inflation rate which slightly dropped from 30.7 percent in February to 30.5 percent in March 2025, to average 27 percent in 2025 down from 32.2 percent in 2024.
Currently, commercial banks have adjusted upwards their May reference rate or base lending rate by 10 basis points from 25.10 percent to 25.20 percent.
Meanwhile, Nico Asset Managers highlighted in its monthly economic report for March that rising interest rates may result in a slowdown of inflation due to a decrease in consumption spending.
