- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 26%
The Reserve Bank of Malawi’s Monetary Policy Committee on 29 October 2025 left the Policy Rate unchanged at 26.0 percent, judging the prevailing stance tight enough to tackle still-high inflation, which inched up to 28.1 percent in Q3 and is now seen averaging 28.9 percent in 2025 amid higher fuel costs, limited fiscal consolidation and persistent supply bottlenecks. The rate has been steady at 26.0 percent since January 2025. To implement policy, the Committee kept the Lombard Rate 20 bp above the Policy Rate and retained Liquidity Reserve Requirement ratios at 10.0 percent for kwacha deposits and 3.75 percent for foreign-currency deposits. The economy is projected to expand by 2.8 percent in 2025, supported by an improved harvest and increased infrastructure and sectoral investments, while the kwacha held broadly stable at MWK 1,750.37 per USD at end-September despite continued foreign-exchange shortages that are sustaining price pressures. Globally, the IMF’s October 2025 World Economic Outlook pegs growth at 3.2 percent next year, with modest increases in oil and fertiliser prices noted by the MPC. The Committee expects maize imports and stronger fiscal discipline, alongside other supply-side actions, to support disinflation and pledges to maintain a tight stance until price stability is secured.
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.