Malawi's Reserve Bank Holds Rates Steady Amid Moderate Inflation
The decision to maintain the policy rate at 24.0% reflects RBM's cautious approach to managing the country's economic challenges and aims to foster stability in the financial sector.
LILONGWE & MZUZU, Malawi - The Reserve Bank of Malawi's Monetary Policy Committee decided Thursday to keep the policy rate at 24.0 percent, citing recent moderation in inflationary pressures, write Winston Mwale and Rabecca Kaunda.
The central bank said in a statement that the committee met Oct. 26-27 to evaluate economic conditions and assess the outlook for inflation.
After weighing persistently weak domestic growth against upside risks to prices, it voted to keep the key rate unchanged.
“The Committee considered the recent moderation in inflationary pressures,” the bank said.
“The Committee was also mindful of the weak domestic growth.”
Inflation has ticked down slightly in recent months but remains elevated, averaging 28.2 percent in the third quarter versus 28.4 percent in the previous three-month period.
The central bank warned that inflation still faces risks from exchange rate fluctuations, global oil prices and unfavorable weather.
“The Committee noted upside risks to the inflation outlook that included exchange rate movements, increases in crude oil prices and adverse weather conditions,” the statement said.
Economic growth, meanwhile, is sluggish amid foreign exchange shortages. The central bank trimmed its full-year GDP growth forecast to 1.9 percent from 2.7 percent due to the impact of Cyclone Freddy.
“Domestic economic recovery had been disrupted by cyclone Freddy, resulting in a modest growth estimate of 1.9 percent in 2023, down from an earlier projection of 2.7 percent,” the bank said.
Wilson T. Banda, the central bank governor, said policymakers are prepared to raise rates if inflationary threats materialize.
“The Committee will continue to monitor closely indications of inflationary pressures and stands ready to act accordingly in line with its monetary policy mandate,” Banda said.
Meanwhile, RBM has called on journalists in the country to interpret and convey the policy decisions to the general public in a language they can understand.
The call was made during a business reporting training organised by the central bank for journalists from the Nyika Media Club (NMC) in Mzuzu.
The training aims to enhance the reporting skills of journalists, enabling them to accurately represent monetary policy and decisions across various media platforms.
Devie Ndege, the Public Relations Manager for the Reserve Bank's Mzuzu branch, highlighted the need for well-trained journalists who can simplify complex financial concepts for broader comprehension.
Chikumbutso Mtumodzi, the Director of Information, emphasised the significance of the training in empowering business journalists to make a greater impact in their respective newsrooms.
Mtumodzi advised journalists to strive to make complex financial information more accessible, open, and engaging to the public.
The training aims to address concerns raised by the general public regarding the interpretation of monetary policy figures, which have sometimes led to misleading information.
The Department of Information encourages journalists to take this training opportunity seriously to ensure accurate and transparent reporting on monetary policy matters.
The decision to maintain the policy rate at 24.0% reflects RBM's cautious approach to managing the country's economic challenges and aims to foster stability in the financial sector.