The Bank of Zambia’s Monetary Policy Committee cut the Monetary Policy Rate by 250 basis points to 10.75 percent, aligning the policy stance with a stronger inflation outlook and supporting lower financing costs. Inflation declined to 6.1 percent in September, within the 6 percent to 8 percent target band, while the forecast indicates it will remain near the band’s lower bound over the projection horizon. Inflation is projected to average 6.7 percent in 2026, moderate to 6.0 percent in 2027 and edge up to 6.3 percent in the first half of 2028. The outlook reflects stable maize prices following a record harvest and the lagged effect of the kwacha’s appreciation. Upside risks include potential super El Niño conditions affecting food production and electricity generation, higher oil prices from geopolitical tensions, and tighter global financial conditions that could weaken capital flows and pressure the exchange rate. Future rate decisions will depend on inflation outcomes, forecasts and risks, including those related to financial stability. The August 2026 Monetary Policy Report is due by Oct. 14, and the next committee meeting is scheduled for Nov. 25-26, 2026.
Bank of Zambia cuts Monetary Policy Rate by 250 basis points to 10.75 percent
The Bank of Zambia cut the Monetary Policy Rate by 250 basis points to 10.75 percent after inflation fell to 6.1 percent and the outlook improved. Inflation is expected to remain near the lower bound of the 6 percent to 8 percent target band, although weather, energy prices and tighter global financial conditions present upside risks.