Commercial banks have reduced the reference rate to 22.4 percent effective Monday, March 9, 2026, down from 23.7 percent.
This follows the Reserve Bank of Malawi’s recent decision to cut the policy rate from 26 percent to 24 percent.
The reference rate is the benchmark lending rate that commercial banks use as a floor when pricing loans to customers.
In practice, banks typically lend at rates five to seven percentage points above the reference rate, meaning most borrowers are still accessing credit at around 30 percent — a reality that has drawn sharp criticism from the private sector.
The adjustment marks the latest step in what some analysts describe as an emerging monetary easing cycle, though opinion is divided on how meaningful the relief will be for businesses and households already battered by years of high borrowing costs.
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Financial Market Dealers Association President Leslie Fatch said the policy rate reduction was informed by projections that inflation is moderating; suggesting interest rates would continue trending downward.
However, he cautioned that recent geopolitical tensions in the Middle East had pushed up oil prices, which could introduce fresh inflationary pressures in the region.
“The MPC may be forced to react if they view this impact to be long term, against the downward trajectory that had been projected. Reduced government borrowing had increased liquidity on the interbank market, which would likely push financial institutions to channel funds toward private sector lending,” Fatch said.
President of the Malawi Confederation of Chambers of Commerce and Industry Wisely Phiri said the reference rate remains too high to sustain most businesses, particularly when actual lending rates hover around 30 percent.
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“We still can’t compete at these rates. Malawi’s reference rate is more than double those of regional neighbours such as Zambia at 13 percent and Mozambique at 15 percent. Our rates are making our products uncompetitive at the regional level, yet we want to promote manufacturing through our ATMM strategy,” Phiri said.
Economist Marvin Banda welcomed the rate movement but urged caution against reading too much into it, describing the current shift as preliminary and lacking the conditions needed to confirm a long, sustainable easing cycle.
He warned that while rate cuts would translate to lower borrowing costs on paper, monetary pass-through mechanisms in Malawi meant the real economy would not rebound quickly, with lag effects stretching up to 14 months.
“The market wants to see a credible, consistent and sustainable low lending practice through a downward disinflationary convergence of food and non-food inflation, real interest rates, sound reserves, moderate credit growth, and supportive external and fiscal conditions — which currently hasn’t been the case for at least six quarters,” Banda said.
Banda called for targeted, sector- specific credit allocation with emphasis on export-oriented, import-substituting and productivity-enhancing sectors, backed by fiscal restraint and tight liquidity control.
He also said reversing the trend of negative savings rates that has persisted since 2014 was critical to restoring monetary credibility.
The Bankers Association of Malawi could not furnish a comment before we went to press.
