Malawi's central bank cut its Liquidity Reserve Requirement (LRR) and its Lombard rate to immediately boost liquidity in in the banking system and lower the cost of funds to give commercial banks an incentive to support those economic sectors that are hit by the COVID-19 pandemic.

The Monetary Policy Committee (MPC) of the Reserve bank of Malawi, at its first meeting for 2020 held on 29th and 30th January, decided to maintain the Policy Rate at 13.5 percent and the Lombard Rate at 0.4 percentage points above the Policy Rate.

Malawi's central bank left its policy rate steady at 13.50 percent and confirmed it expects inflation to average 9.0 percent this year, pushed up by higher maize prices, but this is considered temporary and not a risk to achieving the inflation objective of 5 percent by 2021.

Malawi's central bank lowered its policy rate by another 100 basis points to 13.50 percent, saying the monetary policy stance "remains adequately tight to guide inflation towards the medium-term objective of 5 percent" while future policy decisions will continue to be guided by inflation and progress in fiscal consolidation.