- Decision
- Lower
- Rate change
- 25 bps
- monetary policy rate
- 13.25%
The Bank of Zambia Monetary Policy Committee cut the Monetary Policy Rate by 25 bp to 13.25 percent at its 11–12 May 2026 meeting, judging that a favourable maize harvest and a recently stronger, more stable kwacha will keep inflation within the 6–8 percent target band while acknowledging upside risks from higher global oil prices linked to the Middle East conflict and a potential El Niño. The move extends an easing cycle that has lowered the rate by a cumulative 100 bp since November 2025, including a 75 bp reduction in February 2026. No changes were announced to other operating tools or liquidity conditions. Headline inflation fell to 6.8 percent in April after averaging 8.0 percent in Q1 2026 (11.3 percent in Q4 2025) and is forecast to average 6.8 percent in 2026 and 6.1 percent in 2027 before edging up to 6.6 percent in Q1 2028, aided by lower maize prices and the stronger currency, though recent domestic fuel price increases reflect global crude developments. The kwacha’s appreciation has steadied, and temporary tax relief on petroleum products is moderating energy costs. Persisting geopolitical tensions and weather-related supply risks remain key threats to the inflation path, and the central bank said future rate moves will hinge on inflation outcomes, projections and financial-stability risks; the next MPC meeting is set for 28–29 September 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.