The Reserve Bank of Malawi (RBM) has maintained its main interest rate at 24 percent, meaning borrowing costs will not rise for now, but at the same time it has taken steps to limit how much banks can lend in a move aimed at controlling inflation and stabilising the economy.
George Patridge
The decision, made by the central bank’s Monetary Policy Committee led by Governor George Partridge, means that individuals and businesses will continue accessing loans at roughly the same rates as before, following an earlier reduction from 26 percent in January. However, RBM has increased the Liquidity Reserve Requirement for local currency deposits from 10 percent to 12 percent, which forces banks to keep more money with the central bank instead of lending it out, effectively tightening the flow of money in the economy.
In simple terms, while interest rates have not gone up, banks may become more cautious about lending because they now have less money available to issue as loans. The reserve requirement for foreign currency deposits remains unchanged at 3.75 percent.
RBM says the decision to hold the rate steady is based on a slight improvement in inflation, which dropped from 27.7 percent to 24.3 percent in the first quarter of 2026. This decline is mainly due to better food supply, which has helped ease food prices. However, the situation is still fragile because prices of non-food items continue to rise, driven by high fuel costs and expensive imports.
Governor Partridge said maintaining the current rate will help continue slowing down inflation while keeping expectations stable, signalling that the central bank is trying to avoid sudden changes that could disrupt the economy.
For ordinary Malawians, this means loans remain expensive but are not getting worse, while access to credit may become slightly tighter as banks adjust to the new reserve requirements. At the same time, although prices are still high, the rate at which they are increasing is beginning to slow down.
Looking ahead, RBM expects inflation to continue easing, averaging around 22 percent in 2026 compared to 28.4 percent in 2025, supported by improved agricultural production and earlier policy measures. The economy is also projected to grow modestly to 3.8 percent from 2.7 percent, driven by better performance in agriculture, mining and manufacturing.
However, the central bank has warned that risks remain, particularly from global economic pressures such as geopolitical tensions, which could push prices up again.
The overall message from RBM is that while there are early signs of improvement, the situation remains delicate, and tight control measures are still needed to bring inflation down and keep the economy on a stable path.
