Malawi’s central bank on Tuesday jacked up its benchmark interest rate from 16 percent to 21 percent in attempts to combat inflation.
The Reserve Bank of Malawi last increased the rate in May this year from 13 percent to 16 percent.
“In reaching this decision, the Monetary Committee took into consideration rising inflationary pressures on account of a number of factors including the recent adjustments of the kwacha exchange rate…,” Governor Charles Chuka said in a statement.
Currently inflation has been on the rise resting at 17.3 percent in the month of May up from 12.4 percent in April.
Malawi scrapped its currency peg to the dollar in May, triggering a devaluation of around 50 percent in the Malawian kwacha to halt a downward spiral in the economy.
Chuka said the adjustment has been effected because of continuing excessive monetary growth, as well as increasing interbank market rates as a result of tightening liquidity in the banking system.