• Malawi central bank cuts benchmark rate 200 basis points to 24%

• Decision follows inflation decline, driven mainly by lower food prices

• Economy remains fragile amid drought, fuel shortages and weak growth

Malawi's central bank cut its benchmark interest rate by 200 basis points to 24% from 26%, the Reserve Bank of Malawi said in a statement on Thursday (March 5).

The Monetary Policy Committee said the decision followed a gradual decline in inflation.

“The current inflation outlook allows for a cautious reduction in the Policy Rate, while maintaining a sufficiently tight monetary policy stance, to continue steering inflation towards the medium‑term objective of 5.0 percent,” the statement said.

Overall inflation has improved in recent months, falling from 29.2% in the fourth quarter of 2024 to 27.7% in the fourth quarter of 2025, before easing further to 24.9% in January 2026.

The decline was driven mainly by lower food prices after government measures to increase maize supply. Non-food prices, including fuel and electricity, rose and pushed non-food inflation higher.

The central bank nevertheless expects the inflation outlook to improve in 2026, supported by stronger food supply. Better harvests from the 2025-2026 agricultural season and continued government food assistance programmes are expected to support that trend.

Despite those signs of improvement, Malawi’s macroeconomic situation remains fragile. The country has faced a series of challenges for several years, including external shocks, structurally weak growth, persistent inflation and an unsustainable fiscal and debt trajectory.

A drought that hurt agricultural output, along with foreign currency and fuel shortages, continues to weigh on economic activity.

The International Monetary Fund estimates real GDP growth at 2.4% in 2025, up from 1.8% in 2024 but still below the population growth rate.

Over the longer term, economic growth is projected to rise modestly to 3.4% by 2029, while inflation is expected to remain elevated at around 15%, the fund said.

Lydie Mobio