Falling Kwacha, inflation to rise: Reserve Bank of Malawi raise bank rate
Reserve Bank of Malawi (RBM) has raised its policy rate back up to 25.0 percent as inflation is expected to accelerate to 25.4 percent in December due to rising food price and the depreciating kwacha currency.
Malawi’s headline inflation rate eased to 23.7 percent in September from August’s 24.5 percent, but the central bank said inflation in the second half of this year had generally been higher than in the second half of 2013 and the kwacha has depreciated faster than expected.
The kwacha was quoted at 6.3 to the U.S. dollar today, declining from around 6 at the end of August and 5.51 at the start of the year, a decline of 14 percent.
The RBM attributed the decline in the kwacha to continuing uncertainty surrounding the resumption of donor flows, increasing liquidity from government borrowings from the central bank and the recent negative returns on kwacha holdings.
“The Monetary Policy Committee (MPC) met on 30th October 2014 to review recent economic developments and decide on the monetary policy stance. The Committee observed that inflation outcomes for the second half of 2014 have generally been higher than during the second half of 2013.
“Looking ahead, inflation is expected to accelerate to 25.4 percent in December 2014, largely due to rising food prices and the depreciating Kwacha,” said RBM in a statament
The central bank’s foreign reserves dropped to US$463.4 million, or the equivalent of 2.4 months of imports in September from $478.9 million in August but was up from $447.3 million in September 2013. The country’s foreign reserves amounted to $760.2 million in September, down from $780.6 million in August but up from $744.2 million in September last year.
The central bank said inflation was expected to start decelerating in March 2015 due to better food supply and an expected seasonal appreciation of the kwacha, and it would review its policy stance at the next meeting of its monetary policy committee.
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we have never had strong leaders that would strongly stand and defend their beloved nation. all we see is politics of hetred, where by one thinks only peolple from one region can drive the economy of our nation, while others belive in federal system of governance ..where are we heading to????? …if there was a strong leader there would be no 50%depreciation in 2012, inflation is same as blodsheding from the nation, because as prices rise so many will die as a result of luck of food… anyway at this point I think it would be bater to quit the… Read more »
akufuna kupha osalakwa,,,
What about a local man in the village? How is one going to survive? When one is a leader, it is advisable to balance one’s actions and the welfare of a poor man in the village. Failing to do so, downfall becomes inevitable, mark my words!
Editor,
the story may have quoted exchange rate for the Zambian Kwacha.
kape wina aziti tiyima patokha! we r not yet there unless kubedwa kwa dola kutatha and more ova elect new leaders osati these asakhwi who hav bin tried & tested.
Ayi chiboma cha peter ndichomwecho mumachifuna anthuni.Amabungwe amalangiza kuti Voti yanu ndi sogolo lanu,kavoteni mwanzeru.mwaziwona sopano?tangodikilani ndipo muyelekeze kuti ngati angalamulire zaka 10 zinthu zikhala bwanji kumalawi kuno?
Tiyeni tichitepo kanthu,poti chetechete sausa nyama koma suyo suyo.titeni tizavote mwanzeru zaka zikubwelazi.
Zidze pano nzatonse! We are sailing in the same boat!
Brace for hard times, indeed. Unfortunate, fellow malawians! During J B’s time, foreign reserves were higher and better than this time of diesel, petrol palibe era. So unfortunate, malawians. Anthu ayankhule bwanji kuti mumve? Look at what these politicians are doing. Today, Atupele says he has joined dpp for the sake of development. Sure? Which development? Is this development or self recovery plan? WE ARE WATCHING YOU & GOD WILL DEAL WITH YOU!
Will the policy rate adjustment deal with increasing food prices? Or the aim is just to reduce credit and hence investment? Straight jacket thinking of conventional economics.
This bingu people really know how to spoil malawi and malawians still voted for them and we know that they are thugs from the first brother dont we want change for once.