Secretary to the Treasury Ronald Mangani has put a positive spin to the country’s economic turmoil by dsecriding the Reserve Bank of Malawi (RBM) decision to cut the bank rate or policy rate by 3 percentage points from 27 percent to 24 percent as a sign that economy is on turnaround for better times.
RBM’s Monetary Policy Committee (MPC), chaired by RBM Governor Charles Chuka, resolved to adjust the policy rate downwards by 3 percentage points.
Addressing a news conference , Mangani said it was acceptable for RBM to drop bank rate considering the fact that inflation rate continues to decelerate.
“This reduction in the policy rate reflects the fact that inflation rate is on the downward truck and this means that the economy has started turning round in the right direction,” Mangani told reporters in Blantyre.
According to Mangani, the bank rate reduction will help anchor Malawi’s production cycle
“We are hoping that production will respond to this move by RBM,” he added.
He said government expects more goods being produced, more jobs to be created, saying the trend reflects “a reversal in the economic instability challenge that e have been facing over a long period of time may be witnessed.”
In his remarks, Chuka said the central bank reduced the bank rate because the inflaton rates is slowing down and Kwacha currently is stable.
“The Kwacha exchange rate has been stable and despite the drop in exports, the country’s official foreign exchange reserves remain at about three months of imports,” said Chuka.
He said exchange rate outlook this year is far much better than last year.
“While utility rates might go up, the increase might be relatively less. Thus, year on year inflation will generally continue to slow down,” the central bank Governor said.
He also said actions taken by government “ to reduce fiscal pressure” have combined to necessitate the bank rate policy cut.Follow and Subscribe Nyasa TV :