Reserve Bank of Malawi (RBM) has maintained the policy rate at 24 percent, saying the current monetary policy stance remains appropriate to sustain the country’s disinflation process while safeguarding macroeconomic stability.
The decision was made during the Monetary Policy Committee (MPC) meeting held on August 5 and 6, 2026.
In a statement, MPC Chairperson, George Partridge, said the committee also maintained the Liquidity Reserve Requirement (LRR) at 12 percent for local currency deposits and 3.75 percent for foreign currency deposits.
The Lombard Rate was also maintained at 0.2 percentage points above the Policy Rate.
The committee noted that although inflation has continued to decline, it remains well above the Reserve Bank’s medium-term target of 5 percent.
According to the MPC, headline inflation slowed to 22.9 percent in the second quarter of 2026 from 24.3 percent in the first quarter, driven mainly by lower food inflation following improved food availability.
However, non-food inflation remains elevated due to electricity tariff adjustments and imported inflation pressures.
The central bank projects headline inflation to average 22 percent in 2026, down from 28.4 percent in 2025, with further moderation expected over the medium term.
The outlook is supported by improved food supply, continued fiscal consolidation and the cumulative impact of previous monetary policy tightening.
However, the MPC warned that risks remain, including geopolitical tensions that could disrupt global supply chains and the possibility of El Niño conditions during the 2026/27 agricultural season, which could affect food production.
On economic growth, the RBM revised Malawi’s growth forecast for 2026 down to 2.8 percent from an earlier projection of 3.8 percent, citing weaker performance in non-agricultural sectors.
Despite the downward revision, growth is still expected to improve from 2.5 percent recorded in 2025, supported by better agricultural output.
The committee also observed that annual broad money growth slowed significantly to 21.3 percent in the second quarter from 37.5 percent in the previous quarter, indicating that earlier monetary policy measures are beginning to take effect.
It further said the banking sector remains stable, adequately capitalised and resilient, with non-performing loans remaining below the regulatory threshold.
The next Monetary Policy Committee meeting is scheduled for October 28 and 29, 2026, with the policy decision expected to be announced on October 29.
By Arthur Chokhotho
