The Reserve Bank of Malawi’s Monetary Policy Committee has maintained policy rate at 12 Percent in a move to minimize policy trade-off and balance the efforts of managing inflationary pressures as well as supporting economic recovery.
This was agreed upon at its fourth meeting of 2021 held on 2nd and 3rd November 2021.
The Monetary Policy Committee has also maintained the Liquidity Reserve Requirement (LRR) ratio on domestic and foreign depositsat 3.75percent;andtheLombardrateat20basispointsabovethePolicyrate.
The decision to maintain the policy rate was arrived at after considering the need to continue supporting economic recovery from the impact of the COVID-19 pandemic, whilst monitoring and managing risks to inflation, according to a statement signed by Dr. Wilson Banda-Chairperson for the committee.
However the committee has revised upward headline inflation rate projection with 0.3 percentage points to 9.1 percent in 2021.
The 2022 inflation has also been revised upwards from 8.2 percent to 8.9 percent, reflecting the impact of the recent increase in domestic fuel pump prices; a higher-than-anticipated rise in maize prices in the fourth quarter of 2021; and persistent disruptions to global supply chains.
In its October 2021 World Economic Outlook report, the International Monetary Fund revised downwards the 2021 global real economic growth rate projection from 6 percent projected in the July to 5.9 percent as consequence of less optimism in the growth prospects for the advanced economies, partly attributed to supply chain disruptions.