- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 14.5%
The Monetary Policy Committee of the Bank of Zambia kept the Monetary Policy Rate unchanged at 14.5 percent at its 21–22 May 2025 meeting, judging the current stance appropriate after headline inflation eased to 16.5 percent in March from February’s 16.8 percent and with risks “still tilted to the downside” amid a stable financial system. The rate had been lifted by 150 bp to 12.5 percent in February 2024. The central bank projects inflation to average 13.8 percent in 2025, fall to 8.8 percent in 2026 and reach 7.5 percent in Q1 2027, moving into the 6–8 percent target band, helped by an expected bumper maize harvest of 3.6 million tonnes and lower global crude oil prices. The Committee cited weak global demand and rising oil supply as additional disinflationary forces but warned that heightened global economic uncertainty merits vigilance. Future policy moves will depend on inflation outcomes, forecasts and associated financial-stability risks.
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.