- Decision
- Maintain
- Rate change
- 0 bps
- Policy rate after decision
- 24%
The Reserve Bank of Malawi’s Monetary Policy Committee held the policy rate at 24.0% in its third decision of 2026, judging the stance appropriate to sustain disinflation without unnecessarily weighing on economic activity, although inflation remains well above its medium-term objective and risks are elevated. The policy rate was 26.0% in October 2025, marking a net decline of 200 basis points by August 2026. The committee retained the Liquidity Reserve Requirement at 12.0% for local-currency deposits and 3.75% for foreign-currency deposits, while keeping the Lombard Rate 0.2 percentage points above the policy rate. Headline inflation is projected at 22.0% in 2026, still above the 5.0% objective, while economic growth is forecast at 2.8%, supported by improved agricultural production but constrained by weaker non-agricultural sectors. Broad money growth moderated significantly and banking-system liquidity tightened, indicating that previous policy measures are transmitting through financial conditions. Geopolitical tensions, supply-chain disruptions and elevated international oil and fertilizer prices pose upside risks through higher import and production costs, while possible El Niño conditions threaten domestic food availability. The committee said it would adjust the stance if developments materially alter the inflation outlook, with its next decision due on 29 October 2026.
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.