Zambia Lowers Key Policy Rate to 14.25%

The Bank of Zambia lowered its key Monetary Policy Rate by 25bps to 13.25% at its May 2026 meeting, bringing borrowing costs to their lowest level since mid-2024. Policymakers cited expectations of a favourable maize harvest during the current crop marketing season, along with the relative stability of the Kwacha against the US dollar, as key factors supporting a more benign inflation outlook. These developments are expected to help keep inflation anchored within the central bank’s 6–8% target range. However, the central bank also highlighted persistent upside risks and heightened uncertainty linked to the ongoing conflict in the Middle East, prompting a cautious approach to monetary easing in order to maintain an appropriate monetary policy stance. Inflation is expected to remain within the target band and average 6.8% in 2026 and ease to 6.1% in 2027, before edging up to 6.6% in Q12028. Zambia’s annual inflation rate slowed to 6.8% in April, its lowest level since February 2018.

The Central Bank of Zambia lowered its key policy rate by 75 basis points to 13.5% at its meeting on February 11, 2026, marking the second consecutive cut. The annual inflation slowed sharply to 9.4% in January 2026 from 11.2% in the previous month, driven by the bumper maize harvest from 2024/25 and the appreciation of the Kwacha against major currencies. Policymakers said inflation is expected to fall faster than previously forecast in November, with prices projected to enter the central bank’s 6%–8% target band by the second quarter of 2026 and reach the lower bound by mid-2027. The Bank of Zambia added that its policy stance will continue to be guided by inflation developments, forecasts, and identified risks, including those related to financial stability, while maintaining a position supportive of macroeconomic stability.

The Bank of Zambia reduced its key policy rate by 25 basis points to 14.25% at its regular meeting on November 12, 2025, implementing its first rate cut since August 2020. The move followed a continued moderation in inflation during the third quarter, as policymakers sought to ease monetary conditions while steering price growth back within the target range. Annual inflation eased to 11.9% in October, the lowest level in over two years, down from 12.3% in September. The central bank projected that inflationary pressures will keep moderating in the near term, with average price growth expected at 7.6% in 2026, slightly below the 7.7% forecast at the previous MPC meeting. Policymakers noted, however, that risks linked to external conditions and domestic supply factors remain.