The Monetary Policy Committee (MPC) resolved to maintain the policy rate at 26.0%, citing a slowdown in inflation and expectations of economic recovery in 2025. The Lombard rate remains 20 basis points above the policy rate, while the Liquidity Reserve Requirement (LRR) stays at 10.0% for local currency deposits and 3.75% for foreign currency deposits.
Key Takeaways from the MPC Meeting:
- Inflation Trends: Inflation declined to 29.2% in Q4 2024 (from 33.9% in Q3), with further easing projected in 2025, reaching 22.0% by year-end. However, food prices surged in December, mainly due to maize shortages.
- Economic Growth Outlook: Malawi’s GDP is expected to grow by 4.0% in 2025, up from 1.8% in 2024, driven by improvements in agriculture, mining, and tourism.
- Exchange Rate Stability: The Malawi kwacha stood at K1,749.93 per USD at the end of Q4 2024, showing stability against key foreign currencies.
- Global Economic Context: The IMF projects global GDP growth of 3.3% in 2025, with Sub-Saharan Africa expected to grow by 4.2%.
Looking Ahead
With monetary policy holding steady, the focus now shifts to government measures supporting economic productivity and foreign exchange generation. The next MPC meeting is scheduled for May 6-7, 2025.
