- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 26%
The Monetary Policy Committee of the Reserve Bank of Malawi on 7 May 2025 left the policy rate at 26.0 percent, judging the existing tight stance—reinforced by a Lombard rate 20 bp above the policy rate and unchanged liquidity-reserve ratios of 10.0 percent on local-currency and 3.75 percent on foreign-currency deposits—adequate to guide inflation toward its medium-term objective despite lingering risks from weak agricultural output and fiscal pressures. The benchmark rate was also maintained at 26.0 percent at the January 2025 meeting. Headline inflation averaged 29.9 percent in 2025Q1, edging up from 29.2 percent in 2024Q4 but easing to 30.5 percent in March from 30.7 percent in February; the MPC still expects a decline to about 27.0 percent for 2025 as money-supply growth has slowed to 33.9 percent in 2025Q1 from 48.2 percent a year earlier. GDP growth for 2025 is now seen at 3.2 percent, revised down from the earlier 4.0 percent projection, mainly on weaker agriculture. The kwacha traded at K1,750.25 per USD (TT rate) at end-2025Q1, while bureaux rates were K1,935.93; foreign-exchange reserves are expected to improve in 2025Q2 with the agricultural marketing season. Externally, the committee cited the IMF’s April 2025 outlook pointing to a slowdown in global growth to 2.8 percent next year amid trade tensions and higher commodity costs. The MPC reaffirmed that the current stance is “sufficiently tight” and signalled continued engagement on supply-side measures and fiscal consolidation to support disinflation.
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.