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Reserve Bank of Malawi Sticks to 5% Inflation Goal: What This Means for Your Business

Post was last updated: August 9, 2025

Key Business Points

  • The Reserve Bank of Malawi (RBM) aims to reduce headline inflation to 5 percent in the medium term, despite current rates being over 20 percentage points above target.
  • Food inflation is a significant contributor to the high inflation rate, driven by a food deficit of around 700,000 metric tonnes, but government interventions such as maize imports are expected to help ease the pressure.
  • Achieving the medium-term inflation target is possible if structural challenges are addressed through fiscal consolidation and structural reforms, requiring joint efforts from monetary and fiscal authorities, as well as other stakeholders.

The Reserve Bank of Malawi (RBM) has expressed renewed optimism about achieving its medium-term goal of reducing headline inflation to 5 percent. Despite the current inflation rate of 27.1 percent in July, which is still high, the bank remains confident that it can meet its target. According to RBM Director of Financial Markets Chakudza Linje, the target was set to allow the country to continue producing and operating without slipping into disinflation while maintaining a productive growth path. Linje emphasized that measures currently being implemented are expected to ease inflationary pressure and help bring inflation down over the medium term, which typically refers to a period of three to five years.

Malawi is currently grappling with a food deficit, estimated at around 700,000 metric tonnes, which has driven food inflation, projected at 33.4 percent in the second quarter of 2025. This contributes significantly to the overall high inflation rate. However, Linje expressed confidence that government interventions, such as planned maize imports, would help ease food inflation. She noted that food inflation has been on a downward trend but has recently seen an uptick, which is one of the upside risks assessed by the Monetary Policy Committee (MPC).

Economics Association of Malawi Senior Economist Lucious Pawa agrees that achieving the medium-term inflation target is possible if structural challenges are addressed. Pawa emphasized that fiscal consolidation and structural reforms are necessary to guide the economy back to a stable path. He stressed that this requires joint efforts from monetary and fiscal authorities, as well as all other stakeholders. As Malawian entrepreneurs and business owners would say, "Tithandize mchitidwe" (let’s work together) to address the economic challenges facing the country. By doing so, Malawi can achieve its medium-term goals and promote tsogolo latsokoneza (sustainable development) and economic growth.

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Vanessa Banda
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