The Reserve Bank of Malawi (RBM) just raised the benchmark policy rate by 200 basis points to 26 percent effective February 1, 2024.

The hike of the policy rate, which is the key driver of interest rates on loans, will in turn compel commercial banks to raise their interest rates from the prevailing 23.6 percent, raising the price of loans even further.

RBM Governor Wilson Banda confirmed of the development in a statement made available to this publication.

According to Banda, the Second Monetary Policy Committee (MPC) of 2023 observed that the high inflation environment is not conducive for growth and therefore resolved that a monetary policy response is required to contain inflationary pressures and restore price stability.