- Decision
- Lower
- Rate change
- 75 bps
- monetary policy rate
- 13.5%
The Bank of Zambia’s Monetary Policy Committee cut the policy rate by 75 bp to 13.5 % at its 9–10 February meeting, citing a sharper-than-expected fall in inflation and forecasts showing a quicker move into the 6–8 % target band as early as Q2 2026. The decision follows a year in which the rate was kept at 14.5 % from May and then lowered by 25 bp in November 2025. Headline inflation eased to 11.2 % in December and dropped further to 9.4 % in January, driven by a bumper 2024/25 maize harvest and the Zambian kwacha’s appreciation; the central bank now sees average inflation at 6.9 % in 2026 and 6.3 % in 2027, with risks tilted to the downside. The currency gains are reinforced by supportive external conditions, including higher copper prices, while favourable weather is expected to sustain agricultural output. The committee reiterated that future moves will hinge on realised and projected inflation and associated risks, including those to financial stability.
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.