- 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 31 July 2025 meeting, judging the prevailing tight stance adequate to reinforce a still-fragile disinflation after headline inflation slid from 30.7 percent in February to 27.1 percent in June. The rate has been on hold at 26.0 percent since January 2025. The Lombard Rate remains 20 bp above the Policy Rate, while Liquidity Reserve Requirements stay at 10 percent for local-currency and 3.75 percent for foreign-currency deposits. Inflation averaged 28 percent in the second quarter, and real GDP is projected to expand by 2.8 percent in 2025, up from 1.7 percent in 2024, helped by a better harvest and investments under the Agriculture, Tourism, Mining and Manufacturing strategy. Improved foreign-exchange inflows during the agricultural marketing season have kept the kwacha broadly stable at K1,750.48 per USD. Externally, the IMF’s July World Economic Outlook sees global growth easing to 3.0 percent next year amid persistent trade and geopolitical tensions, while Brent crude prices have softened on higher OPEC+ supply. The Committee expects disinflation to continue and urged fiscal consolidation and wider supply-side support to guide inflation back to its medium-term objective while maintaining its current monetary restraint.
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.