The Reserve Bank of Malawi (RBM) has reaffirmed its tight monetary policy stance, presenting the outcomes of the Third Monetary Policy Committee (MPC) Meeting of 2025 during a technical forum held in Lilongwe on Monday.
The central bank emphasized that despite a declining inflation trend, cautious policy is still necessary to anchor stability.
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Speaking to journalists after the technical forum, RBM’s Director of Financial Markets, Chakudza Linje, said the MPC’s decision to maintain the Policy Rate at 26.0 percent, along with other key parameters, reflects a balance between supporting economic recovery and mitigating inflation risks.
“Although inflation has slowed, falling to 27.1 percent in June from 30.7 percent in February, upside risks remain, especially due to potential food price increases. The committee decided to maintain the current stance to safeguard the gains and sustain the disinflation trajectory,” said Linje.
The forum, which brought together economists, policy experts, and stakeholders from various sectors, served as a platform for RBM to share the rationale behind its decisions and engage the public on future expectations.
According to the statement presented, the Liquidity Reserve Requirement (LRR) was held at 10.0 percent for local currency and 3.75 percent for foreign currency deposits, the Lombard Rate remains pegged at 20 basis points above the Policy Rate.
Linje admitted that growth in money supply and declining foreign reserves continue to pose inflationary pressure.
However, she assured that the central bank is using monetary instruments to manage liquidity while avoiding actions that could suppress production.
“We are coordinating with government on fiscal consolidation to reduce the deficit, which contributes to money supply growth. Meanwhile, we’re also working with the private sector to increase export capacity and improve forex inflows,” he said.
Grace Kunchulesi, Director of Development Planning at the National Planning Commission (NPC), described the MPC decisions as critical in fast-tracking milestones under Malawi 2063 (MW2063).
She said effective monetary policy must be complemented by investment in productive and export-oriented sectors.
“Malawi’s aspirations for middle-income status hinge on implementing the developmental state philosophy, removing barriers that discourage private sector investment in key sectors,” she explained.
Kunchulesi expressed confidence that the ongoing focus on agriculture, tourism, mining, and manufacturing will help the country achieve its 2030 transition targets and several Sustainable Development Goals.
In her words, Executive Director of the Economics Association of Malawi (ECAMA), Dr. Esmie Koriheya Kanyumbu, supported the decision to maintain the policy rate, describing it as a timely and well-judged move.
She emphasized the need for stronger coordination between fiscal and monetary authorities, calling on the government to curtail public spending and direct resources toward growth and export-oriented sectors under the Agriculture, Tourism, and Mining ATM strategy.
“Inflation is falling, but food shortages and global uncertainties remain a threat. This is not the time to relax policy. We need continued coordination between fiscal and monetary authorities,” said Dr. Kanyumbu.
The RBM reaffirmed its commitment to managing inflation, stabilizing the kwacha, and ensuring macroeconomic resilience through coordinated policy and structural reforms.
The next MPC meeting is slated for October 29–30, 2025.
