- Decision
- Lower
- Rate change
- 250 bps
- monetary policy rate
- 10.75%
The Bank of Zambia’s Monetary Policy Committee (MPC) cut the Monetary Policy Rate by 250 basis points to 10.75% in September 2026, aligning the stance with lower-than-previously indicated inflation outcomes and projections while supporting lower financing costs and economic growth. This followed cuts of 25 basis points to 14.25% in November 2025, 75 basis points to 13.5% in February 2026 and 25 basis points to 13.25% in May. Inflation fell to 6.1% in September, within the 6-8% target band, and is projected to average 6.7% in 2026 and 6.0% in 2027, supported by stable maize prices following a record harvest and the lagged impact of kwacha appreciation. The currency’s gains reflected higher mining export earnings and improved foreign exchange liquidity following the December 2025 Currency Directives. The MPC cited expected super El Niño conditions, the protracted Middle East conflict, potentially higher crude oil prices and tighter global financial conditions as upside risks. Future rate decisions will remain guided by inflation outcomes, forecasts and risks, including those related to financial stability.
Rate evolution
From August 2025 to September 2026, the Bank of Zambia lowered the Monetary Policy Rate by 375 basis points to 10.75 percent, after an initial hold at 14.5 percent and then four 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.
At its September 28-29 meeting, the Bank cut the Monetary Policy Rate by 250 basis points after inflation fell to 6.1 percent in September, driven mainly by lower maize grain prices and continued Kwacha appreciation, and projected it to remain close to the lower bound of the target band over the forecast horizon. Inflation was forecast to average 6.7 percent in 2026 and moderate to 6.0 percent in 2027, reflecting anticipated stable maize grain prices and the lagged impact of exchange-rate appreciation, while the decision aligned the policy stance with the improved outlook and supported lower financing costs and economic growth. The Committee nevertheless flagged upside risks from expected super El Niño conditions, the Middle East conflict, broader geopolitical tensions and tighter global financial conditions, and said future decisions would depend on inflation outcomes, forecasts and identified risks, including those associated with financial stability.