WB contradicts RBM on inflation targets

Reserve Bank of Malawi (RBM) has projected average inflation to reach its target of 12.3 percent or below by December 2017, which is 2.9 percentage points higher than what the World Bank has projected.

According to the bank, in 2017, the average inflation rate is projected to decelerate to 15.2 percent, following improved agricultural production and reduced pressure on food prices.

However, in its fifth Monetary Policy Statement, RBM says the precise path of monetary easing will remain data-dependent while being conditional on inflation being on track to reach its target of 12.3 percent or below by December 2017.

“Inflation is currently projected to reach 10.7 percent in June [year-on-year] and 8.5 percent in December 2017. Rapidly declining inflation creates room for gradual easing of monetary policy,” said RBM governor Dalisto Kabambe in the statement released on Monday.

Malawi inflation rate has remained in double digits for the past five years but of late, the country’s annual rate of inflation has been falling steadily for more than 10 months since June 2016, with May inflation rate at 12.3 percent year-on-year from 14.6 percent in April.