- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 26%
The Reserve Bank of Malawi’s Monetary Policy Committee kept the policy rate unchanged at 26.0 percent at its 29–30 January 2025 meeting, retaining the Lombard rate at 20 bp above the policy rate and holding the liquidity reserve requirement at 10.0 percent for local-currency deposits and 3.75 percent for foreign-currency deposits, judging that a recent deceleration in inflation provides scope for future easing but that elevated food prices, external imbalances and fiscal pressures still pose upside risks. On the domestic front, headline inflation averaged 29.2 percent in 2024Q4, down from 33.9 percent in 2024Q3, with the authorities projecting a fall to 22.0 percent by end-2025, while real GDP growth is expected to rebound to 4.0 percent in 2025 from 1.8 percent in 2024, supported by agriculture, mining and tourism; the kwacha ended 2024Q4 at MWK 1,749.93/USD and appreciated against the euro and rand. Externally, the MPC highlighted lower Brent crude prices (USD 74.63/bbl in 2024Q4) and IMF forecasts of 3.3 percent global growth in 2025, tempered by risks from rising protectionism. The Committee signalled that sustained disinflation could create room for rate cuts and pledged additional measures to boost productivity, foreign-exchange generation and financial-sector reforms, with enhanced stakeholder engagement ahead of its next policy review in May.
Rate evolution
Between July and October 2025, the Reserve Bank of Malawi kept the Policy Rate unchanged at 26.0%, maintaining a restrictive stance as disinflation proved slow and then stalled. In July, the Monetary Policy Committee judged that the drop in headline inflation, driven mainly by lower food inflation, was not sufficient to secure a downward trend, even as growth was seen recovering, the kwacha remained stable and foreign-exchange supply improved seasonally, and it noted an uncertain global environment marked by trade and geopolitical tensions. The Committee argued that monetary restraint had to be backed by fiscal consolidation and supply-side measures, including support to productive and export-oriented sectors and food-supply interventions, to guide inflation toward its medium-term objective. By October, the hold reflected a rise in inflation to 28.1%, a higher 2025 inflation forecast partly due to pump fuel price adjustments, firmer non-food inflation, weak foreign-exchange supply relative to demand and limited fiscal consolidation, with the MPC saying risks to the inflation outlook remained but expecting maize imports, revenue mobilisation and other coordinated interventions to help ease price pressures.
In August 2026, the MPC held the Policy Rate at 24.0% as headline inflation eased to 22.9% in the second quarter from 24.3% in the first, mainly because of lower food inflation and improved food availability, while non-food inflation remained elevated amid electricity tariff adjustments and imported inflation pressures. It judged that further tightening could unnecessarily weigh on economic activity, while premature easing could reverse progress on inflation and expectations, and retained the stance to allow earlier policy actions to work through the economy despite risks from geopolitical tensions, supply-chain disruptions and possible El Niño conditions.