By Benadetta C. Mia
The Reserve Bank of Malawi has raised the policy rate to 18 percent, attributing the change to continued underperformance of the economy and the weakening of the Kwacha currency.
In a statement released by the Central Bank which has been signed by its governor Dr Wilson Banda, the bank held it’s 4th Monetary Policy Committee for 2022 on 26th October where it was decided to raise the policy rate to 18 percent from 14 percent.
According to Banda, the decision was necessary to restore price stability which is essential for reviving and sustaining economic growth.
Banda noted that high inflation could frustrate the country’s economic recovery process hence the decision to raise the policy rate.
Meanwhile the bank has projected a slow down in economic growth for 2022 to 1.7 percent from 4.2 percent in 2021.
Banda cited high inflation rate, fuel and power shortages as well as the Russia-Ukraine war as some key factors that have necessitated a downward review on this year’s economic growth projections.
On the other hand, trade deficit continues to widen as in the third quarter of 2022 Malawi registered a trade deficit of K434.2 billion as compared to K252.2 billion registered in the second quarter.