Economists say the Reserve Bank of Malawi (RBM) should consider loosening monetary policy at its forthcoming Monetary Policy Committee (MPC) meeting later this month, following significant easing of inflation and money supply growth. The economists were commenting on the policy rate review prospects at a time inflation rate has dropped from 35 percent in January 2025 to 26 percent at the end of December 2025 while money supply growth eased from 52 percent in August to 42.8 percent in October 2025 and was at 51.8 percent in the corresponding period 2024. The National Statistical Office attributed the decline in inflation to maize supply interventions, which suggests that tight monetary policy could not effectively control inflation; hence, is not favourable to Malawi’s environment.
In an interview on Tuesday, University of Malawi economics lecturer Edward Leman said based on the current inflation trend, he expects a more practical and context-specific approach to inflation management in the current environment. He said: “The standard monetary policy framework can be questioned in our case, particularly given how inflation has behaved across food, non-food and headline components. “In my view, tight monetary policy has not been as effective as one would ideally expect.
Non-food inflation, for instance, has remained stubbornly high, suggesting that demand compression alone is not adequately addressing underlying price pressures.” Leman said much of the recent decline in headline inflation appears to have been driven largely by movements in food inflation rather than broad-based disinflation, calling for a policy shift to address supply issues by loosening monetary policy. In a separate interview, Mzuzu University economics lecturer Christopher Mbukwa said since food inflation, which is the country’s main inflation driver is projected to continue easing, the MPC should review the policy rate and consider shifting it’s focus towards supply side. “The question that I hold really is that it took direct maize market intervention by the government to see inflation dropping what a heightened policy rate couldn’t do in over three years,” he said.
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Economics Association of Malawi president Bertha Bangara-Chikadza noted that while inflation declined over the past year, this trend reflects the combined effects of tight monetary policy and timely supply-side interventions like maize imports. “Although at 26 percent inflation rate is still on the high and at 42.8 percent money growth is still high, the gains that have been made so far have significantly come from easing food prices as non-food inflation is still on the rise,” she said. On his art, economic consultant Booker Matemvu projected a slight policy rate cut, but said the economic forecast remains volatile until the 2026/27 budget is presented in March when a significant policy rate cut is expected.
RBM Deputy Governor for operations Kisu Simwaka described the current inflation trend as a sign that inflation has turned the corner, which could pave the way for a policy rate cut to support economic growth. In its latest Market Intelligence Report, RBM has projected an optimistic inflation outlook for the near-term, noting that easing food prices have bolstered Malawi inflation’s resilience to external shocks.
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