Malawi lowers key rate 200 bps as inflation eases
March 6, 2026
2 min read
The Reserve Bank of Malawi cuts its policy rate to 24% in a cautious move under new Governor George Partridge, signaling improving inflation trends and support for economic recovery in the donor-dependent nation. Photo:Mike Hutchings / Reuters
The Reserve Bank of Malawi reduced its benchmark policy rate by 200 basis points to 24% on Thursday, in a measured step to support growth as inflationary pressures show signs of easing.
Partridge, who chairs the committee, described the move as a balanced response to recent data showing inflation trending downward.
The cut reflects growing confidence that price pressures are moderating after years of stubborn highs above 20% since mid-2022.
Inflation Trends Support Easing
Headline inflation fell for the third straight month to 24.9% year-on-year in January 2026, down from 26% in December 2025, according to National Statistical Office figures. Food inflation eased notably to 22.1% from 26.5%, helped by government efforts to improve maize supplies and stabilize food prices.
Non-food inflation rose to 29.8%, but the overall trajectory has encouraged policymakers to act.
The central bank expects further improvements in 2026, driven by stronger agricultural output from the 2025/26 farming season and ongoing relief measures.
The rate reduction arrives as President Peter Mutharika, elected last year, works to revive Malawi’s fragile economy. Mutharika appointed Partridge, a former minister of industrialization, business, trade and tourism, as governor in January 2026 to lead monetary efforts.
Malawi is pursuing a new support program with the International Monetary Fund after the previous arrangement ended without fully restoring stability.
High public debt, exceeding 90% of gross domestic product, continues to pose risks, underscoring the need for careful policy balancing.
In a recent budget speech, the finance minister projected the policy rate declining to 18% by the end of the 2026/27 fiscal year starting in April, with inflation slowing to 15%.
The Lombard rate remains 20 basis points above the policy rate, and liquidity reserve requirements are unchanged.
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