LILONGWE, July 31 (Reuters) - Malawi's central bank has decided to cut its key interest rate to 13 percent from 15 percent amid falling inflation and slightly weaker growth projections, a senior central bank source said on Saturday.
'The Bank's monetary policy committee has decided to reverse the decision it made last month that the rate remains stable and decided to reduce it to 13 percent because the current economic environment justifies that,' the source told Reuters.
The landlocked southern African nation's central bank left rates unchanged in May, due in part to a shortage of foreign currency putting pressure on the domestic unit, the kwacha .
However, Governor Perks Ligoya said at the time that falling forecasts for inflation and economic growth, due mainly to a prolonged dry spell hitting farming output, left the door open for later cuts in lending costs.
One of the world's fastest growing economies in the last few years, Malawi is expecting 6.5 percent expansion this year, compared to earlier projections of 7.0 percent.
Annual inflation slowed to 7.5 percent in June from 7.8 percent the previous month due to lower food prices.
The International Monetary Fund lent Malawi nearly $80 million in February to try to ease a foreign exchange shortage that government officials blamed on slow aid disbursement by donors and poor receipts from sales of tobacco, its main export.
Huge fuel and fertilizer import bills in 2009 also added to the dollar supply crunch.
(Reporting by Mabvuto Banda, writing by Ed Cropley, editing by Miral Fahmy) (For more Africa cover visit: http://af.reuters.com. To comment on this story, email SouthAfrica.Newsroom@reuters.com) Keywords: MALAWI RATES/
(edward.cropley@thomsonreuters.com; +27 11 775 3165: Reuters Messaging: edward.cropley.reuters.com@reuters.net)
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