Reserve Bank of Malawi keeps borrowing costs unchanged as price pressures ease

The Reserve Bank of Malawi (RBM) has kept its benchmark policy rate unchanged at 24.0 per cent, as the central bank’s Monetary Policy Committee (MPC) opted to let previous tightening measures continue working through the economy rather than adjust borrowing costs further. The decision, taken at the MPC’s third meeting of 2026, comes as inflation continues its gradual descent, falling to 22.9 per cent in the second quarter from 24.3 per cent in the first. The central bank forecasts inflation will ease further to 22.0 per cent by year-end, a trajectory it attributes to the cumulative effect of its monetary policy interventions to date.

“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,” said George Partridge, MPC chairperson and RBM governor, following the meeting. Despite the improving inflation picture, policymakers flagged several risks that could disrupt the pace of disinflation, including continued global economic uncertainty, elevated import costs, and adverse weather conditions that could weigh on food production and prices – a persistent vulnerability for an economy still heavily reliant on rain-fed agriculture. The committee struck a broadly optimistic tone on growth, projecting the economy will expand by 2.8 per cent in 2026, underpinned by improved agricultural output and continued resilience in the banking sector.

The rate hold suggests the central bank remains focused on consolidating recent gains against inflation rather than shifting toward a looser policy stance, even as growth prospects show tentative signs of improvement. At 24 per cent, Malawi’s policy rate remains among the highest in the region, reflecting the scale of the inflationary pressures the central bank has been contending with in recent years. The decision underscores the balancing act facing Malawian policymakers as the country continues to navigate a recovery shaped by both domestic constraints – including foreign exchange shortages that have featured prominently in recent political debate – and broader global headwinds affecting import costs and capital flows to frontier markets.