Reserve Bank of Malawi revises 2023 inflation target
The Reserve Bank of Malawi (RBM) has revised downwards its annual headline inflation target to 18.2 percent from 21.5 percent on the back of expected good agricultural output.
This is contained in the RBM Monetary Policy Committee (MPC) statement issued last week.
However, the central bank expects inflationary pressure to persist due to high costs of farm inputs such as fertiliser.
“However, the recent global developments, which have seen prices of most of Malawi’s key imported commodities declining, are a source of confidence for a downward inflation trajectory expected in 2023, due to easing imported inflation,” the report reads.
The MPC report also says inflation was likely to remain in double digits in 2023, making it unconducive to support economic growth.
“The MPC reasoned that it was prudent to hold on to the previous monetary policy decisions to allow time for assessing the impact of price adjustments emanating from the normalisation of global commodity prices, in addition to other factors,” it says.
RBM has since maintained the policy rate—the rate at which commercial banks borrow from the central bank as lender of last resort—at 18 percent.
Economist Murry Siyasiya, however, said maintaining the policy rate is not ideal if the country is to increase production.
“We need to increase local production by establishing companies but that cannot happen if interest rates are still high. Therefore, RBM should handle monetary policies better,” he said.
Last year, inflation maintained an upward trajectory, seen above 26 percent by close of the year.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.