- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 24%
The Reserve Bank of Malawi held its policy rate at 24.0%, judging that declining inflation and subdued growth argued against an increase, while premature easing could reverse progress on disinflation. The rate had fallen from 26.0% in October 2025 to its current level by August 2026. The central bank raised the Lombard rate to 26.0% to strengthen liquidity management and monetary policy implementation. Headline inflation moderated to 20.1% in the third quarter of 2026, driven mainly by improved food availability, but remained significantly above the medium-term objective. The central bank revised its 2027 inflation forecast upward to 20.0%, signalling slower disinflation than previously anticipated, with El Niño weather conditions posing an upside risk. Economic growth is projected at 2.8% in 2026, supported by improved agricultural production, while private-sector credit growth slowed. Globally, Middle East tensions continued to generate uncertainty, and oil and fertiliser prices remained elevated for Malawi’s import bill despite quarterly declines. The central bank said it would remain vigilant and adjust its policy stance if emerging developments materially altered the inflation outlook.
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 (MPC) judged that the drop in headline inflation, driven mainly by lower food inflation, was not sufficient to secure a downward trend and called for fiscal consolidation and supply-side measures, including support to productive and export-oriented sectors and food-supply interventions, to reinforce monetary restraint. 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 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, judging that further tightening could unnecessarily weigh on economic activity while premature easing could reverse progress on inflation and expectations.
On 28 October 2026, the Policy Rate remained at 24.0% as headline inflation moderated to 20.1% in the third quarter but stayed above the 5.0% medium-term objective, with the MPC balancing subdued growth and private sector credit against the risk that premature easing could reverse progress in reducing inflation and anchoring expectations. The MPC also raised the Lombard Rate to 26.0%, widening its margin above the Policy Rate from 0.2 to 2.0 percentage points to strengthen liquidity management and monetary policy implementation, and flagged continued inflation risks from geopolitical tensions and the increased likelihood of El Niño conditions during the 2026/27 agricultural season.