Reserve Bank of Malawi has announced that it has cut its benchmark lending rate by 250 basis points to 22.5 percent on Tuesday.
The central bank said it rate cut has come about because the outlook for inflation was favourable due to a relatively stable exchange rate for the kwacha currency.
“The Committee noted that fiscal prudence and management of food supply situation will be critical to mitigating inflationary pressures,” the Reserve Bank of Malawi’s monetary policy committee said in a statement.
Bank rate is the rate at which commercial banks borrow money from the central bank and the rate has been static for almost two years at 25 percent now.
It is a monetary policy tool used to stabilise the currency movement and contain high inflation rates, among other macroeconomic indicators.