Policy rate maintained at 24%
RBM has kept its key interest rate at 24 percent
he Reserve Bank of Malawi (RBM) has kept its key interest rate at 24 percent, saying the decision will help keep inflation on a downward path while protecting the country’s economic recovery.
The decision was announced on Thursday after the bank’s Monetary Policy Committee (MPC) met on August 5 and 6 to review the economy and inflation.
According to the committee, keeping the rate unchanged gives earlier measures to control rising prices more time to work.
The committee also left unchanged the amount of money commercial banks must keep with the central bank.
It maintained the Liquidity Reserve Requirement (LRR) at 12 percent for local currency deposits and 3.75 percent for foreign currency deposits.
The Lombard Rate, which determines the cost of emergency borrowing by banks from the RBM, also remained unchanged.
The policy rate is the interest rate the central bank uses to influence borrowing costs in the economy. When it changes, commercial banks often adjust the interest rates they charge customers on loans.
According to the MPC, inflation fell to 22.9 percent in the second quarter of 2026 from 24.3 percent in the first quarter.
The decline was mainly due to lower food prices, helped by improved food availability.
However, the committee said the prices of many non-food items remained high because of electricity tariff increases and the rising cost of imported goods.
The RBM expects inflation to average 22 percent this year, down from 28.4 percent in 2025. It said inflation will continue falling as food supplies improve, government finances are better managed, and the effects of earlier interest rate increases continue to filter through the economy.
The committee, however, warned that risks remain. It said growing geopolitical tensions could disrupt global supply chains and push up import costs.
It also warned that possible El Niño weather conditions during the 2026/27 farming season could reduce food production and increase food prices.
The RBM also lowered its economic growth forecast for 2026 to 2.8 percent from an earlier estimate of 3.8 percent, mainly because sectors outside agriculture are expected to perform more slowly.
Even so, the economy is still projected to grow faster than the 2.5 percent recorded in 2025, supported by improved agricultural production.
The committee also noted that the amount of money circulating in the economy grew more slowly during the second quarter, while cash available in the banking system became tighter.
It said this shows earlier measures to control inflation are beginning to have the intended effect.
According to the MPC, raising interest rates further could slow business activity and economic growth, while cutting them too soon could cause inflation to rise again before it is fully under control.
For that reason, the committee said keeping the policy rate at 24 percent remains the best option for now.
It added that it will continue monitoring inflation and the wider economy and will adjust the policy rate if conditions change significantly.
The MPC’s next meeting is scheduled for October 28 and 29, with its next monetary policy decision expected on October 29, 2026.
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