Reserve Bank of Malawi withdraws K80.6 billion
Central bank tightens monetary policy to combat inflation despite recent price decreases.
The Reserve Bank of Malawi (RBM) removed K80.6 billion from the financial market last week through open market operations. This action is part of the central bank's ongoing tight monetary policy aimed at controlling inflation. The withdrawals included K68.5 billion via overnight operations, K10 billion through 62-day agreements, and K2.1 billion via 60-day agreements.
RBM figures show that inflation eased to 19.4 percent in September 2026, falling below 20 percent for the first time since May 2022. Despite this decrease, the central bank maintained its policy rate at 24 percent. Malawi Economic Justice Network Executive Director Bertha Phiri stated that the withdrawal reduces aggregate demand and money supply growth, complementing the policy rate.
Economist Marvin Banda suggested the withdrawal should be viewed alongside fiscal challenges, noting government borrowing's contribution to inflationary pressures. The government forecasts inflation to reach 15 percent by the end of 2026, while the IMF projects it to average 21.9 percent in 2026 and rise to 25 percent in 2027.
Why it mattersThe Reserve Bank of Malawi's withdrawal of K80.6 billion from the market could increase borrowing costs for businesses.