The Economist Intelligence Unit (EIU) forecasts that Malawi’s monetary policy will remain tight at 26 percent this year, driven by inflationary pressures induced by global supply chain disruptions.
The UK-based think tank’s projection arrives just as the Reserve Bank of Malawi (RBM) lowered the policy rate from 26 percent to 24 percent in April.
The government remains optimistic, expecting the rate to drop further to 18 percent due to anticipated improvements in agricultural productivity and ongoing fiscal consolidation efforts.
However, the EIU warns that the impact of the ongoing conflict in Iran on global prices will weigh heavily on net-importing countries like Malawi.
In its latest analysis, also cited in the Nico Asset Managers Monthly Economic Report for April 2026, the EIU noted that while energy and food prices may eventually stabilise, exchange rate volatility and fiscal deficit challenges will keep inflation moderately high.
Consequently, they predict the policy rate will only ease to approximately 22 percent by 2030.
“Persistent fiscal deficits, ongoing deficit financing, and expected currency depreciation, potentially involving periodic exchange rate adjustments due to foreign reserve shortages, are likely to keep inflation relatively high,” the report states.
In a separate interview, Mzuzu University economics lecturer Christopher Mbukwa noted that external factors remain the primary drivers of Malawi’s inflationary pressures, making global developments impossible to ignore.
“The current impasse in the Middle East is likely to exacerbate inflation in Malawi as global fuel prices rise,” Mbukwa said.
He added that if these risks persist and headline inflation climbs, the Reserve Bank of Malawi (RBM) would likely tighten monetary policy.
Last week, the RBM’s Monetary Policy Committee (MPC) maintained the policy rate at 24 percent to stabilise prices and ensure macroeconomic stability.
To complement this, the MPC increased the liquidity reserve requirement for local currency deposits from 10 to 12 percent, a move intended to mop up excess liquidity that continues to fuel inflation.
According to the National Statistical Office, inflation eased slightly to 23.8 percent in March 2026 from 24.1 percent in February, aided by cooling food prices.
