(By Vinjeru Ngwira)
The Reserve Bank of Malawi (RBM), through its Monetary Policy Committee (MPC), has maintained the policy rate at 26.0 percent, signaling a continued tight monetary policy stance aimed at anchoring inflation expectations and preserving macroeconomic stability.
This decision was announced during the Monetary Policy Technical Forum held at Sunbird Mzuzu Hotel on Thursday, 8th May 2025.
Speaking to the media, Mark Lungu, Director of Economic Policy and Research at RBM, noted that a further increase in the policy rate would have elevated the cost of borrowing, with adverse implications for credit access by households and firms, potentially stifling private sector activity and economic recovery.
Lungu highlighted that money supply growth during the recent electoral period stands at 33.9 percent, an improvement from the previous election cycle, where liquidity expansion reached 48 percent. This moderation in money circulation reflects improved monetary discipline and mitigates inflationary pressures.
On government borrowing, Lungu emphasized the need to enhance domestic revenue mobilization to ensure alignment with planned fiscal expenditures. He further urged fiscal authorities to exercise expenditure rationalization and implement consolidation measures to contain the fiscal deficit and maintain public debt at sustainable levels.
Lungu also provided a positive inflation outlook, particularly in the agricultural sector. He noted that projections for maize prices indicate a deceleration in food inflation, which is expected to contribute to overall price stability in the near term.