The Reserve Bank of Malawi (RBM) has maintained its Policy Rate at 24 percent but increased the Lombard Rate spread from 0.2 to 2.0 percentage points above the Policy Rate to strengthen liquidity management in the banking system.
The decision follows the Monetary Policy Committee’s (MPC) fourth meeting of 2026, held on October 28.
The committee also maintained Liquidity Reserve Requirements at 12 percent for local currency deposits and 3.75 percent for foreign currency deposits.
The MPC said headline inflation declined to 20.1 percent in the third quarter of 2026 from 22.9 percent in the previous quarter, largely due to lower food inflation. However, non-food inflation remained high at 31.9 percent.
The central bank projects inflation to average 22 percent in 2026, compared to 28.4 percent in 2025, while economic growth is expected to improve to 2.8 percent from 2.5 percent.
It said maintaining the Policy Rate was necessary to balance inflation control with the need to support economic growth and private sector borrowing.
Meanwhile, economic expert and International Trade Council board member Paul Kwengwere said borrowing costs would remain high, particularly for small and medium-sized enterprises (SMEs).
“Borrowing still remains expensive, making it tough for the private sector, more especially SMEs,” he said.
Kwengwere warned that high non-food and transport costs would continue putting pressure on households despite declining food inflation.
He, however, observed that the 24 percent Policy Rate against 20.1 percent inflation translates into a slightly positive real interest rate of approximately 3.9 percent, offering some relief to fixed-deposit savers.
The MPC said it would continue monitoring economic developments and adjust its policy stance if necessary to safeguard price stability.
