Suleman Chitera 
By Suleman Chitera, MFN Reporter
The Reserve Bank of Malawi (RBM) has maintained its Policy Rate at 24 percent but increased the Lombard Rate to 26 percent from 24.2 percent, signalling continued efforts to control inflation despite persistent economic challenges.
The decisions were reached during the Monetary Policy Committee (MPC)’s fourth meeting held on October 28 and 29, 2026, as the central bank seeks to sustain progress in reducing inflation while supporting economic recovery.
MPC Chairperson Dr George Partridge said the Committee had opted to maintain the Policy Rate because previous monetary policy measures were beginning to produce the intended results, particularly in containing inflation.
He said changing the rate at this stage could reverse the gains made in controlling inflation, especially amid subdued economic growth and limited private sector credit.
However, the Committee resolved to increase the Lombard Rate, which determines the interest commercial banks pay when accessing short-term borrowing facilities from the central bank, from 24.2 percent to 26 percent.
The decision comes as Malawi continues to grapple with high inflation, which remains a major concern for households and businesses.
According to RBM, headline inflation declined to 20.1 percent in the third quarter of 2026 from 22.9 percent in the preceding quarter, largely due to a slowdown in food price increases.
Food inflation dropped from 17.1 percent to 13.4 percent during the period. However, non-food inflation remained elevated at 31.9 percent, indicating continued pressure on the cost of goods and services outside the food category.
The central bank projects average inflation of 22 percent in 2026 before easing to 20 percent in 2027.
On economic growth, RBM expects Malawi’s economy to expand by 2.8 percent in 2026, supported by anticipated improvements in agricultural production.
Meanwhile, Economics Association of Malawi (ECAMA) President Bertha Bangara-Chikadza had earlier cautioned against premature reductions in interest rates, arguing that maintaining a tight monetary policy stance was important to protect the progress made in controlling inflation.
The latest MPC decision therefore maintains the existing benchmark borrowing rate while tightening the conditions under which commercial banks access short-term liquidity from the central bank.
RBM has scheduled its next Monetary Policy Committee meeting for January 28 and 29, 2027, when it will review economic developments and determine whether further adjustments to monetary policy are necessary.
