- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 14.5%
The Bank of Zambia’s Monetary Policy Committee left the Monetary Policy Rate unchanged at 14.5 percent at its 11–12 August meeting, judging that a continued restrictive stance is warranted even as headline inflation has retreated to 14.1 percent in June and 13.0 percent in July on the back of stronger maize supply, lower fuel prices and a firmer kwacha, yet still sits above the 6–8 percent target band amid elevated inflation expectations and lingering global trade and geopolitical uncertainties. The rate has been steady at 14.5 percent since the May 2025 review. Updated projections see inflation averaging 13.3 percent in 2025 before dropping into the target band in the first quarter of 2026 and easing further to an average 7.7 percent that year, with downside risks stemming from higher prospective copper export earnings, subdued crude prices and ongoing external debt restructuring. The committee said future policy decisions will continue to hinge on incoming inflation data, forecasts and financial-stability considerations in order to lock in recent disinflation gains.
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.