Minister of Finance and Economic Planning Goodall Gondwe has hinted at the possibility of a reduction in interest rates after inflation eased to 16.1 percent in February from 18.2 percent in January.
Latest figures released by the National Statistics Office show that inflation, also described as the rate at which the price of goods and services fluctuate, slowed by two percentage points in the past month. This should come as good news to consumers as this means there will be an improvement in disposable incomes.
Gondwe said it is exciting for the country that inflation is going down at a time when the exchange rate has stabilised.
“We are succeeding very much as far as inflation is concerned. The next step, I will be talking to the central bank governor so that we have to now start thinking of reducing the interest rate very meaningfully.
“If we do that, we will encourage production in the private sector and that is what we want as a government,” Gondwe said.
He, however, could not be drawn to estimate by how much the interest rates could go down.
Gondwe said the Reserve Bank of Malawi (RBM) will make its calculations and recommend to the government on the next step forward.
“This is the first time in a row we are reducing the rates by two percentage points which shows that we can reach much quicker the single digit rate,” he said.
RBM Publicist, Mbane Ngwira, said the decision to reduce interest rates can only be reached after the Monetary Policy Committee has met.
The inflation rate averaged 15.3 percent from 2001 until 2017 reaching an all-time high of 37.9 percent in February 2013 and a record low of 6.3 percent in December 2010.