By Wendy Mkandawire
The Reserve Bank of Malawi (RBM), through its Monetary Policy Committee (MPC), has maintained the Policy Rate at 24.0 percent and raised the Lombard Rate to 26.0 percent.
This follows a two-day meeting held on 27th and 28th October 2026 to assess recent macroeconomic developments and the medium-term inflation outlook.
According to the Committee, although inflation has moderated, it still remains significantly above RBM’s medium-term objective of 5.0 percent, posing risks to the inflation outlook.
The meeting reviewed inflation developments, with findings showing that inflation moderated to 20.1 percent in the third quarter of 2026, from 22.9 percent in the preceding quarter. The decline was mainly driven by lower food inflation, which averaged 13.4 percent, down from 17.1 percent.
The Committee noted that the external environment continues to contribute to economic uncertainty, citing tensions in the Middle East as a key factor. Global growth has been projected at 3.1 percent in 2026 and 3.4 percent in 2027.
On the domestic front, the economy is projected to grow by 2.5 percent in 2026, the same rate as in 2025, supported by improvements in agricultural production.
Meanwhile, the Committee observed that inflation is on a downward trend, indicating that previous monetary policy actions are producing the desired effects.
The MPC emphasized that an increase in the Policy Rate may not be appropriate at this time, as inflation is declining while economic growth remains weak.
Reacting to the findings, economic expert Milward Tobias concurred with the Committee, saying some factors are beyond the control of the Reserve Bank of Malawi. He said tensions in the Middle East have affected the country’s economy as importing essential goods like fuel has become a challenge.
Tobias said the increase in the Lombard Rate is a wake-up call for commercial banks to sustain their businesses and avoid bankruptcy. However, he warned that the rise could lead to an increase in commodity prices.
He emphasized that to reduce inflation, the country needs to improve supply, including exporting more products to generate forex, which would help reduce inflation and control money circulation.
