Malawi Interest Rate2001-2021 Data | 2022-2023 Forecast | Calendar | Historical

The Reserve Bank of Malawi left its benchmark policy rate unchanged at a record low of 12% at its January 2021 meeting. The decision is aimed to contain the impending inflationary pressures whilst at the same time providing space for supporting recovery of the economy in the wake of the second-wave of the COVID-19 pandemic. The Committee also mentioned that the decision will allow the impact of the November 2020 policy rate reduction to transmit and permeate through the economy. Policymakers noted that the headline inflation has been declining since January 2020 to an average of 7.5% in the fourth quarter of 2020 although it is projected to average 7.8% in 2021. The economic growth outlook remains uncertain, largely dependent on the evolution of the COVID-19 pandemic. In general, domestic economic growth is likely to remain subdued in 2021.

The Reserve Bank of Malawi lowered its benchmark policy rate by 150 bps to 12 percent at its November 2020 meeting, bringing the rate to its lowest level on record. The decision is aimed at supporting economic recovery and job creation. Policymakers noted that the headline inflation has been declining since January 2020 and the inflation outlook appears favourable. Inflation is now projected to average 8.6 percent in 2020 from an earlier estimate of 9.8 percent. In 2021, it is anticipated that inflation will continue to decline. Meanwhile, the economy is projected to grow 1.2 percent in 2020, far below 5.1 percent in 2019, reflecting the adverse impact of the pandemic on manufacturing, tourism and accommodation, health services and wholesale and retail trade sectors.

The Reserve Bank of Malawi kept its benchmark policy rate unchanged at 13.5% during its July 2020 meeting chaired by the newly-appointed Governor Wilson Banda. Policymakers said that the adopted policy stance is appropriate to deal with emerging upward risks to the medium-term inflation path whilst also supporting economic activity hit hard by the global pandemic. Growth projection for 2020 was revised down to 1.9% from an earlier forecast of 5.5%, on account of the impact of protracted political uncertainty in the first half of the year and the COVID-19 pandemic including the associated containment measures. Inflation is expected to accelerate to 9.8% in 2020 from 9.4% a year before, amid impending significant inflationary pressures emanating from a gradual pick-up in food prices (largely maize), increased short term pressure on the exchange rate, increase in global oil prices and increased public sector financing requirements.

The Reserve Bank of Malawi left its benchmark policy rate steady at 13.5% during an unscheduled two-day meeting in April of 2020 when it announced the release of USD 16 million across the banks to enable them to support sectors hit by the Covid-19. In this regard, the lombard rate and the liquidity reserve requirement rate were cut to 13.7% and 3.75%, respectively. Policymakers added that maintained the policy rate to mitigate against potential upward risks from the pandemic while monitoring developments as they evolve and act as and when necessary. According to them, the recent strong agricultural harvests have boosted growth, but the evolution for the remainder of the year will depend on the impact of the pandemic on several sectors. Still, economic growth is seen rising further to 6-7% in the medium term, backed by the infrastructure, access to credit and crop diversification. Inflation is expected to slow to 9.3% in 2020 from 11.5% a year before, as food inflation should ease.