- Decision
- Lower
- Rate change
- 25 bps
- monetary policy rate
- 14.25%
The Bank of Zambia’s Monetary Policy Committee cut the policy rate by 25 bp to 14.25 percent at its 10-11 November meeting, judging that the faster-than-expected slide in inflation and supportive external conditions warranted a cautious easing even though headline inflation and inflation expectations remain above the 6–8 percent target band. After being held at 14.5 percent in both May and August 2025, the rate has now been trimmed for the first time this year. Annual inflation fell to 11.9 percent in October from 12.3 percent in September and 14.1 percent in June, helped by a stronger kwacha and lower maize and fuel prices; nonetheless, the 2025 inflation forecast was nudged up to 13.8 percent on slower food disinflation before easing to 7.6 percent in 2026 and 6.6 percent over the first three quarters of 2027. Improved external sector conditions, including higher copper export earnings and subdued crude-oil prices, alongside an easing in geopolitical tensions, are seen reinforcing the disinflation trend. The committee reiterated that future policy moves will depend on inflation outcomes, forecasts and associated financial-stability risks, with the next review scheduled for 9-10 February 2026.
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.