RBM Maintains 26% Policy Rate, Citing Inflation Stability
The policy rate is a key instrument used to influence inflation and economic activity by controlling the cost and availability of credit.
MZUZU, Malawi — The Reserve Bank of Malawi (RBM) has held its policy rate steady at 26 percent for the second quarter of 2025, citing a stabilizing inflation outlook while maintaining a cautious stance amid ongoing economic uncertainties, writes Victor Musongole.
The announcement was made on Thursday, May 8, during the Monetary Policy Technical Forum held at Sunbird Mzuzu Hotel.
The Monetary Policy Committee (MPC) reached the decision as inflationary pressures showed signs of easing, though concerns about low agricultural production remain.
Mark Lungu, Director of Economic Policy and Research at RBM, told reporters that maintaining the current rate is meant to preserve stability in the cost of borrowing, which directly affects households and businesses.
“The policy rate and other monetary policy variables have been maintained but will be under observation going forward. This means the cost of borrowing remains the same, which is to the advantage of ordinary citizens,” Lungu said.
He also noted that inflation has improved significantly, falling from 48 percent to 33.9 percent, largely due to better fiscal discipline and promising harvest projections.
“We are seeing deceleration in maize prices, which strengthens the positive inflation outlook and contributes to overall price stability in the third quarter,” Lungu said, while urging the government to enhance domestic revenue generation and curtail public spending.
The Central Bank also assured the public that the monetary supply would remain unaffected by election-related activities.
Public finance expert Dalitso Kubalasa expressed concern that the unchanged rate may do little to help small-scale entrepreneurs struggling with access to affordable capital.
“It appears that we should not expect cheaper loans soon as we brace for continued high borrowing costs,” Kubalasa said.
“This is quite ironic for ordinary Malawians who are fighting to grow their small businesses. The Central Bank is prioritizing stability over growth, cautious of the still highly fragile economic environment.”
Kubalasa emphasized the need for a broader strategy that includes boosting productivity, value addition, and export orientation, in addition to monetary and fiscal policy balancing.
The policy rate is a key instrument used to influence inflation and economic activity by controlling the cost and availability of credit.
The MPC’s next quarterly meeting is scheduled for the first week of August.