- Decision
- Raise
- Rate change
- 150 bps
- monetary policy rate
- 12.5%
The Bank of Zambia’s Monetary Policy Committee lifted the Monetary Policy Rate by 150 bp to 12.5 percent on 14 February 2024, aiming to curb mounting price pressures as kwacha depreciation, higher maize and fuel costs, and weather-related food shocks push inflation further above the 6–8 percent target band through at least Q4 2025. Annual inflation quickened to 13.2 percent in January after averaging 12.9 percent in Q4, while the February business survey shows expectations of persistently high prices over the next 12 months. The Committee said the hike balances inflation control with financial-sector stability and medium-term growth, and it welcomed ongoing fiscal consolidation, external debt-restructuring progress and prospects for stronger investment. Exchange-rate weakness remains a key upside risk, and the central bank stands ready to act again if inflation fails to converge toward target, with the next MPC review scheduled for 13–14 May 2024.
Rate evolution
From August 2025 to May 2026, the Bank of Zambia lowered the Monetary Policy Rate by 125 basis points to 13.25 percent, after an initial hold at 14.5 percent and then three cuts as disinflation gathered pace. The early pause reflected inflation still well above the 6-8 percent target band and expectations still elevated despite lower fuel prices, improved maize supply and Kwacha appreciation, while later easing was driven by faster disinflation from the bumper maize harvest, lower maize prices, currency strength and supportive external conditions, with the Committee initially judging risks as tilted to lower inflation. By May 2026, with inflation at 6.8 percent in April and projected to stay within the band over the forecast horizon, the Committee still opted for only a cautious 25 basis point cut, citing favourable harvest prospects and exchange-rate stability but stressing that uncertainty had shifted toward upside risks from the protracted Middle East conflict, higher oil and domestic fuel prices, and a possible El Niño event, while signalling that future moves would depend on inflation outcomes, forecasts and financial stability risks.