Malawi’s central bank maintained its benchmark interest rate at 25 percent, a six-year high, as it maintains its fight against inflation, the monetary policy committee said.
The decision was based on “the need to allow more time for the recent monetary tightening to work through the system,” the Reserve Bank of Malawi said in a statement published on its website.
“After a thorough assessment of the recent economic developments, the MPC [Monetary Policy Committee] resolved to maintain the Bank rate at 25.0 percent and the Liquidity Reserve Requirement (LRR) at 15.5 percent,”
The central bank raised the benchmark rate by 4 percentage points in December to curb an increase in prices and stem weakness in the southern African nation’s currency. Inflation accelerated 33.3 percent in November from 30.6 percent in October, the bank said.
The central bank said the decision to maintain the bank rate was based on the fact that the November 2012 inflation figure was in line with the projections made during the previous MPC meeting and the need to allow more time for the recent monetary tightening to work through the system.
RBM maintains that at an average of 31.4 percent, prime lending rates among most commercial banks ‘were marginally negative.’
President Joyce Banda devalued the kwacha by a third against the dollar a month after taking office in April and deregulated fuel prices. That was in line with recommendations from the International Monetary Fund to allow the resumption of donor aid.
The kwacha was the worst performer in Africa last year against the dollar, slumping 51 percent. The currency retreated 0.4 percent to 346.5 per dollar by 8:46 a.m. in the capital, Lilongwe, taking its drop this year to 3.4 percent.