Industry raises more questions on policy rate hike
Industry captains took turns to ask for justification from Reserve Bank of Malawi Governor Wilson Banda on the decision to increase the policy rate to 22 percent from 18 percent, as announced by the Monetary Policy Committee on Thursday.
Airtel Malawi Managing Director Charles Kamoto wondered why the policy rate was increased to tame inflation when the problem is stemming from an insatiable appetite for borrowing by the government.
Immediate past president of the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) James Chimwaza added that the problem is not caused by MCCCI members who are law abiding but are affected by decisions such as raising policy rate.
Banda said inflation is checked through tools they have such as the policy rate, exchange rate and liquidity reserve ratio to block out liquidity.
“We know there is inflation we need to deal with and these are the tools that we have. We are working out a programme with the International Monetary Fund (IMF) which will ensure consistency in the short term and should help tame governments borrowing trends. In the short term the problem we are facing is inflation but in the long term the fiscal side should help check this problem,” Banda said.