The Reserve Bank of Malawi (RBM) has maintained its policy rate at 24.0 percent, as the Monetary Policy Committee (MPC) moves to preserve gains made in taming inflation while keeping the door open for policy adjustments if conditions change.

The decision was announced Thursday following the MPC’s third meeting of 2026, held on 5th and 6th August.

Alongside the policy rate, the Committee also maintained the Liquidity Reserve Requirement (LRR) ratio at 12.0 percent for local currency deposits and 3.75 percent for foreign currency deposits, while the Lombard Rate remains at 0.2 percentage points above the policy rate.

The in a statement signed by the Reserve Bank of Malawi governor, George Partridge, MPC said the current monetary policy stance remains appropriate to support the ongoing disinflation process while safeguarding progress made toward restoring macroeconomic stability.

However, the Committee cautioned that although inflation continues to moderate, it remains significantly above the Reserve Bank’s medium-term target of 5.0 percent, with risks to the outlook still elevated.

Headline inflation eased to 22.9 percent in the second quarter of 2026, down from 24.3 percent in the first quarter, extending a disinflation trend that has been underway since the fourth quarter of 2025.

The decline was driven mainly by lower food inflation, supported by improved food availability. Non-food inflation, however, remained elevated, reflecting electricity tariff adjustments and continued imported inflation pressures.

Looking ahead, headline inflation is projected to average 22.0 percent in 2026, down from 28.4 percent in 2025, with further moderation expected over the medium term. This outlook is supported by improved food supply conditions, continued fiscal consolidation, and the cumulative effects of previous monetary policy tightening.

Still, the MPC flagged significant upside risks, including heightened geopolitical tensions that could disrupt international supply chains, as well as the possibility of El Niño weather conditions during the 2026/27 agricultural season, which could affect food availability.

On the external front, the Committee noted that the global economy continues to face heightened uncertainty amid geopolitical tensions and persistent supply-chain challenges. Global growth is now projected at 3.0 percent in 2026, slightly down from the 3.1 percent projected in April.

International oil and fertilizer prices remain elevated despite some easing from earlier volatility, continuing to pose risks to Malawi through higher import costs.

Domestically, Malawi’s economy is projected to grow by 2.8 percent in 2026, below the earlier forecast of 3.8 percent, mainly due to weaker performance in non-agricultural sectors. Even so, this would represent an improvement on the 2.5 percent growth recorded in 2025, supported largely by improved agricultural production.

The MPC also highlighted a sharp slowdown in broad money growth, which moderated to 21.3 percent in the second quarter of 2026 from 37.5 percent in the previous quarter — falling below nominal GDP growth for the first time since 2019. Banking sector liquidity tightened considerably, a sign that previous monetary policy measures are gradually taking effect. The banking sector itself remained stable, adequately capitalised, and resilient, with non-performing loans staying below the regulatory threshold.

The MPC said inflation continues to evolve broadly in line with earlier projections, an indication that previous monetary policy actions are producing the intended effects. However, with inflation still well above the medium-term target and external shocks and domestic supply-side risks persisting, the Committee opted for caution.

It assessed that further tightening could unnecessarily weigh on economic activity, while easing prematurely could risk reversing progress made in reducing inflation and anchoring expectations. Holding the rate at 24.0 percent, the MPC said, will allow the full effects of previous policy actions to continue working through the economy while supporting continued disinflation.

The Committee said it will remain vigilant and adjust its policy stance if emerging developments materially alter the inflation outlook.

The statement was signed by Dr George Partridge, Chairperson of the MPC.

The next MPC meeting is scheduled for 28th and 29th October 2026, with the decision to be announced on 29th October 2026.