Banks maintain reference rate


Commercial banks in the country have maintained reference rate at 12.20 percent in February at the back of a slight decrease in overnight borrowing and increase in Treasury bill yields.

This is according to statements published yesterday by some of the commercial banks.

According to Bankers Association of Malawi (Bam), the policy rate has been stable at 12.20 percent mainly due to a decrease in average overnight interbank rate by 0.23 percent which was countered by an increase in all type Treasury bill yield by 0.27 percent.


Bam Chief Executive Officer Lyness Nkungula said during the period the policy rate did not change resulting in a constant Lombard rate.

She added that the slight and opposite movements in Treasury bill rates and interbank rate managed to offset each other, hence neutralising the impact on the reference rate.

“This will have no impact on the consumer in terms of the cost of borrowing from banks. Comparatively in the same period, the cost of borrowing slightly increased for government as market liquidity challenges pushed up yields across all Treasury securities,” Nkungula said.


Financial Market Dealers Association President McLewen Sikwese said stability of the reference rate is mainly attributable to the minimal and offsetting changes in the various variables used in the calculation of the rate especially interbank borrowing and Treasury bills.

He said the stabilisation of the reference does not translate into anything in terms of the cost of borrowing for individuals and businesses.

“During period under review, the policy rate did not change resulting in maintained lombard rate but nothing actually changes for the consumer in terms of the cost they are facing for borrowing from banks,” he said.

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