RBM Maintains Policy Rate at 24.0% to Anchor Disinflation Process

Malawi Exclusive

The Reserve Bank of Malawi (RBM) has maintained its benchmark Policy Rate at 24.0 percent According to the Monetary Policy Statement issued after the MPC meeting on 5th and 6th August 2026, the current stance “remains appropriate to support the ongoing disinflation process while preserving the progress made towards restoring macroeconomic stability.”

According to the statement, which MPC chairperson who is also the Bank’s Governor, George Patridge has signed , the Committee has also “maintained the Liquidity Reserve Requirement (LRR) ratio at 12.0 percent for local currency deposits and 3.75 percent for foreign currency deposits.” The Lombard Rate was also “maintained at 0.2 percentage points above the Policy Rate.”

Policy statement says , “although inflation has continued to moderate, it remains significantly above the Reserve Bank’s medium-term objective of 5.0 percent, and risks to the inflation outlook remain elevated.”

Headline inflation “moderated to 22.9 percent in the second quarter of 2026 from 24.3 percent in the first quarter,” according to RBM. The Bank said the decline was “driven mainly by lower food inflation, supported by improved food availability.”

However, “non-food inflation remained elevated, reflecting electricity tariff adjustments and continued imported inflation pressures,” according to the statement.

RBM projects that “Headline inflation is projected at 22.0 percent in 2026, down from 28.4 percent in 2025.” According to the Committee, “headline inflation is expected to continue declining over the medium term” supported by “improved food supply conditions, continued fiscal consolidation, and the cumulative effects of previous monetary policy tightening.”

According to the statement, “significant upside risks remain.” These include “heightened geopolitical tensions, resulting in possible disruptions to international supply chains.” Domestically, “the possibility of El Niño weather conditions during the 2026/27 agricultural season is a key risk, given its potential impact on food availability.”

According to the MPC, “The global economy continues to face heightened uncertainty amid geopolitical tensions and persistent supply-chain challenges.” As a result, “global growth is now projected at 3.0 percent in 2026, lower than 3.1 percent projected in April 2026.”

Domestically, “The domestic economy is projected to grow by 2.8 percent in 2026, lower than the earlier forecast of 3.8 percent, mainly reflecting weaker performance in non-agricultural sectors,” according to the statement.

RBM however notes that “economic activity is expected to improve relative to the 2.5 percent growth recorded in 2025, supported largely by improved agricultural production.”

According to the Bank, “Annual broad money growth moderated significantly to 21.3 percent in the second quarter of 2026 from 37.5 percent in the previous quarter.” At this level, “broad money growth is below the nominal GDP growth for the first time since 2019.” The statement added that “the banking system liquidity tightened considerably.”

“The banking sector remained stable, adequately capitalised, and resilient, with the ratio of non-performing loans remaining below the regulatory threshold,” according to RBM.

According to the MPC, “inflation continues to evolve broadly in line with earlier projections and that previous monetary policy actions are producing the intended effects.” However, “inflation remains significantly above the medium-term objective, while external shocks and domestic supply-side risks continue to pose challenges.”

The Committee stated that “further tightening of monetary policy could unnecessarily weigh on economic activity, while premature easing could risk reversing the progress made in reducing inflation and anchoring expectations.” The MPC therefore “concluded that the current monetary policy stance remains appropriate,” according to the statement.

RBM concluded that “Maintaining the Policy Rate at 24.0 percent will allow the full effects of previous policy actions to continue working through the economy while supporting the continued moderation of inflation.”

The MPC said it “will remain vigilant and adjust the policy stance if emerging developments materially alter the inflation outlook.”