Reserve Bank of Malawi reduces policy rate to 14.5%

The Reserve Bank of Malawi (RBM) has trimmed the policy rate—the rate at which commercial banks borrow from the central bank as lender of last resort—by one point five  percentage points from 16 percent to 14.5 percent.

RBM governor Dalitso Kabambe announced this at a news conference  on the Monetary Policy Committee decision.

He said RBM are hopeful that commercial banks “will respond to this cut” to promote economic activity.

The bank has also reduced Liquidity Reserve ratio to 5% from 7.5%.

Kabambe says from now on, commercial banks will use the Lombard rate at 14.9% as the base lending rate.

He urged the banks to restructure themselves so that they offer loans at a low cost without affecting their operating profits.

RBM has since said it will continue engaging commercial banks to reduce their interest rate to reduce the cost of capital.