Economy fast gaining ground—RBM
Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe has said the downward trajectory of the inflation rate in the recent months is an indication that the Malawi economy is fast gaining ground in macroeconomic stability, which is conducive to economic growth.
The governor said this in reaction to the country’s inflation rate which has been falling steadily.
Latest figures provided by the National Statistical Office (NSO) showed that the country’s inflation again slowed to 12.3 percent year-on-year in May from 14.6 percent in April, 2017.
In a written response to a questionnaire on Thursday, Kabambe said the development calls for continued efforts by both the fiscal and monetary authorities to ensure that recorded macroeconomic stability is entrenched over a long period of time for the real sector to respond.
He said: “Now, more than ever, we are on the verge of getting into a single digit inflation. This is good news for the government, business, households and everyone in this country. This has emanated from the tightening of monetary policy as well as the stabilisation of maize prices.”
According to Kabambe, the downward trend of inflation Kabambe is on account of the recent declines in food prices, fiscal operations, exchange rate developments and movements in international oil prices which have remained subdued simultaneously for some time.
On outlook for the future, the bank has maintained that its projections point to a continued declining trend until single digit inflation is achieved.
“All upside risks to inflation developments are to some extent within manageable levels for now and into the medium term. This has also been bolstered by the resumption of donor budget support which will go a long way in helping the Bank to build sufficient foreign exchange reserves of more than three months of imports,” he said.
To keep up with the pace Kabambe said the central bank through the monetary policy committee will continue keeping the policy rate above headline inflation. Thus keeping a positive real policy rate and ensuring that money supply growth is well under check through intensification of our mop-up operations.
Speaking in a seperate interview, economic statistician Alick Nyasulu has described the downward trajectory of inflation as a right path which could mean that government is borrowing less. n
