The Reserve Bank of Malawi (RBM) has projected an optimistic inflation outlook for the near-term, noting that easing food prices have bolstered Malawi inflation’s resilience to external shocks.
In its latest Market Intelligence Report, the central bank noted that the inflation rate dropped to 27.9 percent in November 2025 from 29.1 percent the previous month despite mixed inflation and exchange rate trends across advanced, emerging and sub-Saharan African economies.
Reads the report in part: “Commodity prices showed limited volatility while the domestic economy recorded a slight easing in headline inflation to 27.9 percent driven by lower food prices while non-food inflation continued to rise.
“Overall, these developments reflect resilience to external shocks and provide a cautiously optimistic outlook for the near-term.”
RBM has attributed declining prices of maize to increasing supply on the market against a backdrop of sustained speculation coupled with expectations of lower prices following importation of the staple grain from neighbouring Zambia.
In a commentary posted on Facebook, RBM Deputy Governor Kisu Simwaka said the easing of inflation looks set to continue and could prompt the central bank to lower the policy rate, the rate at which commercial banks borrow from the central bank as the lender of last resort.
He said: “It is the stubborn nature of inflation that has made the Reserve Bank of Malawi hesitant to reduce interest rates.
“But if inflation continues to decline supported by encouraging macroeconomic data, it could be perfectly reasonable to reduce interest rate.”
In an interview yesterday, Economics Association of Malawi president Bertha Bangara Chikadza said if the cautiously optimistic outlook were to materialise, it would signal that Malawi’s economy is beginning to withstand external shocks even in the midst of global uncertainty.
She said: “Sustained easing in headline inflation, especially if it is supported by stable food prices, would improve macroeconomic stability which is critical on the road to recovery.
“Lower sustained inflation may also gradually create room for a less restrictive monetary policy, lowering borrowing costs overtime.”
Bangara Chikadza said optimism should be viewed as conditional and dependent on improved fiscal management, exchange rate availability, domestic production and policy implementation.
In a separate interview, University of Malawi associate professor of economics Gowokani Chijere Chirwa said if such projections materialise, it would be good news to the industry while tipping RBM on how to sustain the trend.
“Our inflation is production-induced, specifically agriculture. We need to intensify production and also the central bank should hold on to the current policy that they have used since the inflation has been held,” he said.
Economist Edward Leman said given these projections, consumers and businesses can draw some assurance of relatively stable conditions, which are key for medium- to long-term planning.
“Lower and more predictable inflation reduces uncertainty and supports investment decisions,” he said.
At its last meeting of 2025, the RBM Monetary Policy Committee has kept the policy rate at 26 percent, with commercial banks’ lending rates at as high as 37 percent due to inflationary pressures.
