A new calculation formula for determining reference rate or base lending rate for commercial banks, has been implemented by the Reserve Bank of Malawi (RBM). The new calculation, with immediate effect, will involve composition of the reference rate for commercial banks’ lending rate by including three other rates in the calculation of the base lending rates for banks, with the weight on the Lombard Rate has now been reduced from 1005 to 59%.

The remaining 41% of the weight has been apportioned as follows: 91-day Treasury bill [T-bills] rate [10%], interbank bank market rate [30%] and savings rates [1%], according to a statement by RBM.

In uniform with the above, all commercial were directed to adjust their base lending rates to reflect the change in their lending rates, adding that the central bank does not expect any upward adjustments to applicable risk premiums of commercial banks clients that is added to the base lending rates.