By Malawi Exclusive
Reserve Bank of Malawi (RBM) has maintained policy rate at 12.0 percent.
This was announced in Blantyre soon after the Monetary Policy Committee (MPC), had met at its first meeting of 2022 held on 2nd and 3rd February 2022.
According to the statement which the Governor Wilson Banda has signed , Liquidity Reserve Requirement (LRR) ratio on domestic and foreign currency denominated deposits have been pegged at 3.75 percent while the Lombard rate is 20 basis points above the Policy rate.
“In arriving at this decision, the Committee noted that, although inflation pressures are mounting, the sources were considered transitory and likely to dissipate after the lean period. At the same time, there is need for policy support to entrench the recovery of the domestic economy from
the COVID-19-induced slowdown. Global Economic Outlook,”
Banda said global economy continues to recover from the recession induced by the
“This is largely being driven by rising vaccination rateswhich have enhanced business confidence, in addition to policy support particularly in advanced economies. The IMF World Economic Outlook update released in January 2022 has maintained the 2021 global growth at 5.9 percent compared to a contraction of 3.1 percent in 2020.” He said.
The Governor said in 2022, global growth is projected to moderate to 4.4 percent. This is, however, a downward revision from an earlier forecast of 4.9 percent, attributed to the impact of the outbreak of the Omicron COVID-19 variant.
Banda said other downside risks to the projected growth include: high and broad-based inflation emanating from
rising energy prices and supply chain disruptions, particularly in the USA and
many emerging market economies; and the ongoing retrenchment of China’s real
In 2023, global economic growth is projected to slow further to 3.8 percent. Banda cited global factors contributing to the data.
He said Developments in Global Crude Oil Prices Brent crude spot oil prices rose to an average of US$79.57 per barrel in 2021Q4 from US$73.00 per barrel in 2021Q3.
“After rising to US$83.65 per
barrel in October 2021, crude oil prices declined to an average of US$74.30 per
barrel in December 2021. Meanwhile, the Organization of Petroleum Exporting
Countries (OPEC) agreed to maintain production targets on anticipation that the
Omicron variant would be short-lived with minimal disruption on economic
activity. It is expected that the OPEC decision would result in normalisation of
demand and supply as well as recovery of inventories, with Brent crude oil prices
projected to ease to an average of US$73.00 per barrel in 2022Q1.” He said.
On Domestic Economic Outlook the Governor said according to the November 2021 estimates, real GDP is projected to grow by 4.1 percent in 2022, from an estimated growth of 3.9 percent in 2021.
The Governor said mining, construction activities agricultural season are poised to contribute positively to growth in 2022, following the investments currently being undertaken in these sectors.