Malawi’s central bank maintained its benchmark interest rate at 26% on Thursday, saying policy needed to stay tight to keep inflation on a downward trajectory.
The Reserve Bank of Malawi’s main lending rate (MWCBIR=ECI) has been at 26% since February 2024.
The donor-dependent Southern African country has been mired in an economic crisis, with inflation above 20% for the past three years, a growing budget deficit and rising public debt.
A shortage of foreign currency means there are often snaking queues at petrol stations.
The International Monetary Fund (IMF) thinks Malawi’s monetary policy should be tighter to fight inflation more aggressively, as the central bank’s policy rate is below the latest inflation rate of 27.1% (MWCPIY=ECI).
Malawi’s latest IMF programme was terminated in May after no review was completed over 18 months and it failed to restore macroeconomic stability.
The government has said it will seek to negotiate a new IMF programme after national elections in September that will pit incumbent President Lazarus Chakwera against rivals including former leader Peter Mutharika.
The central bank said it had decreased its economic growth forecast for this year to 2.8% from growth of 3.2% seen at its previous meeting in May.