Addressing members of the press in Lilongwe on July 4, 2018 on monetary policy and other economic developments, RBM Governor Dr Dalitso Kabambe said Monetary Policy Committee met to review current world and domestic economic developments.

Kabambe disclosed that the committee which comprises officials from RBM, Treasury, private sector and the academia observed that despite the reduction in inflation in May 2018, risks to inflation still persist.

“The economy is on a sound footing and you can even be witnesses. Food inflation is low and non-food inflation is also in low levels. Prices of maize and other essential commodities such as fuel have been stable for quite some time which shows that we are heading in the right direction. If things continue going the way they are, the economy will be very stable up to next year,” said the Reserve Bank Governor.

Besides, Kabambe said the MPC resolved to maintain the current monetary policy rate in order to consolidate pre-empt possible build up of inflation risks and ensure that inflation remains in single digit.

Meanwhile, this is the third time the Central Bank maintained policy rate in the country at 16%.

The policy interest rate is an interest rate that the monetary authority in this case the Central Bank sets in order to influence the evolution of the main monetary variables in the economy like consumer prices, exchange rate or credit expansion, among others.

It determines the levels of the rest of the interest rates in the economy, since it is the price at which private agents-mostly private banks-obtain money from the Central Bank. These banks then offer financial products to their clients at an interest rate that is normally based on the policy rate.