The Bank has also maintained the lambard rate which is the rate at which banks borrow on short term at 13.9 percent which is 0.4 percent above the policy rate and the liquidity reserve requirement on local currency deposits at 5 percent.
Addressing journalists s in Lilongwe on Wednesday on monetary policy and other economic developments, RBM Governor Dalitso Kabambe said the Monetary Policy Committee met to review current world and domestic economic developments.
Kabambe disclosed that the committee which comprises officials from RBM, Treasury, private sector and the academia observed that the economy has displayed notable resilience despite the adverse effects of Cyclone Idai and the weak performance of tobacco exports in 2019.
“Real Gross Domestic Product GDP continues to recover and is projected to grow by 5 percent in 2019; inflation has remained in single digit, and was recorded at 9.3 percent in the third quarter of 2019; the exchange rate remains remarkably firm, currently trading at around K740 PER us Dollar,” he said.
“Lending rates continue to decline, with the base lending rate (now the reference rate) recorded at a historically low level of 12 percent; and private sector credit continued to expand, having grown by an average of 19.1 percent in the third quarter of 2919 up from 15.1 percent in the preceding quarter and 9.9 percent in the corresponding quarter of 2018.” said the Reserve Bank Governor.
Besides, Kabambe said the MPC observed that the positive macro-economic outlook envisaged during its first meeting of 2019 remains firm.
Meanwhile, Kabambe said inflation increased in the third quarter of 2019 to 9.3 percent from 9.0 percent in the second quarter of 2019, on account of food inflation which has risen to 14.2 percent from 13.5 percent in the second quarter of 2019, and 9.9 percent in the corresponding quarter of 2018.
“Food inflation has largely been driven by maize prices which rose to K227 per KG in October from K130 per KG in October 2018. Food prices pressure may marginally intensify during lean period but is expected to substantially decline at the onset of the next harvest season. Non Food inflation, on the other hand has remained remarkably low as it declined further to an average of 5.4 percent in the third quarter of 2019 from 5.5 percent in the previous quarter, largely owing to stability in the exchange rate” Kabambe said.
The Governor said the credit growth remains strong and money supply growth is not expansionary and the global prospects have downgraded.
Meanwhile the next date of the MPC meeting is 29 and 30 January 2020.
