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Banks maintain reference rate

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Leslie Fatch

Commercial banks in the country have maintained the reference rate – the benchmark rate for other rates including lending interest rates – at 17.3 percent effective Thursday.

This follows the publishing of statements by commercial banks on the development.

In a recent interview, Financial Market Dealers Association President Leslie Fatch said the development was expected once effects of the October policy rate raise filtered in.

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However, National Association for Small and Medium Enterprises General Manager Frank Tauzi said borrowing from commercial banks remains expensive in the country.

“While inflation rate remains high and the direction of the policy rate remains unpredictable, banks should introduce facilities that will make borrowing affordable, especially for SMEs.

“There are some banks which have SME facilities, and we ask them to sustain the facilities, but there is more which needs to be done so that there is easy access to finance for SMEs,” Tauzi said.

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In October 2022, the Reserve Bank of Malawi moved the policy rate upwards to 18 percent from 14 percent in a bid to arrest rising inflation.

“It is prudent for central banks to take a cautious approach, as ignoring these fundamentals may cost monetary policy by prolonging the period of high and double digit inflation, which is unconducive for promoting the attainment of high and sustainable economic growth,” a November 2022 Market Intelligence Report by the RBM reads.

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