LILONGWE-(MaraviPost)-The Reserve Bank of Malawi (RBM) has maintained policy rate at 18 percent, a decision made at the Monetary Policy Committee (MPC) and the Liquidity Reserve Requirement at 7.5 per cent in trying to keep with the latest developments in the economy and the need to keep the inflation firmly on the downward path.
The announcement has come through a statement made by MPC after it conducted a review meeting for global and domestic economic developments and it has been signed by Chairman of the committee, Dr Dalitso Kabambe, who is also Reserve Bank of Malawi Governor.
This policy stance will help consolidate the gains achieved so far in reducing the inflation rate to ensure that it remains at single digit for a longer period to guarantee sustainably low interests rates, thereby enhancing private sector investments and economic growth.
“By maintaining the tight monetary policy stance it will mean entrenching the stability of the kwacha exchange rate by moderating demand for foreign exchange, thereby allowing the central bank to accumulate foreign reserves,” the statement reads in part.
The global growth was estimated at 3.1 percent in 2016 and this year it is estimated to accelerate at 3.5 per cent. The pickup in global economic activity is driven by developments in emerging and developing economies.
According to the statement, the real Gross Domestic Product (GDP) growth is projected to rebound to 6.4 per cent this year from 2.7 per cent last year, a feat that is coming on the back of favourable weather conditions and improving microeconomic environment.
The statement further said the bank continued to withdraw excess liquidity from the banking system and consequently conditions in the money markets remained tight as evidenced by the interbank rate being kept close to the Policy Rate.